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Growing fiscal risk in European Union resulting from government contingent liabilities in the pandemic crisis – assessment and policy recommendations

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  • Dan Gabriel Anghel
  • Iustina Alina Boitan
  • Kamilla Marchewka-Bartkowiak

Abstract

The pandemic crisis, responsible for increased levels of financing with public debt and contingent liabilities, may trigger another debt crisis across the European Union. Our research indicates that member states are increasingly willing to use public guarantees and other off-budget instruments, which are classified as "hidden debt" or "hidden expenditure". Simulations have shown that if public guarantees have to be covered by the budget, an unprecedented increase in a public debt may occur across the euro area countries and the entire EU as a whole. Therefore, the authors recommend the introduction of uniform rules for estimating fiscal risk due to contingent liabilities, as well as standards for their reporting, allowing for their constant monitoring at the EU level.

Suggested Citation

  • Dan Gabriel Anghel & Iustina Alina Boitan & Kamilla Marchewka-Bartkowiak, 2022. "Growing fiscal risk in European Union resulting from government contingent liabilities in the pandemic crisis – assessment and policy recommendations," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 35(1), pages 2292-2312, December.
  • Handle: RePEc:taf:reroxx:v:35:y:2022:i:1:p:2292-2312
    DOI: 10.1080/1331677X.2021.1941178
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