With Swiss firms struggling through another lockdown, the federal government last week finally loosened its purse strings a bit, doubling emergency aid to $11.2 billion as part of a programme to boost the economy.
Germany, which is known for strict budgets, has tapped debt markets to prop up its virus-hit economy, while neighbouring Switzerland has consistently curbed borrowing despite calls to change course.
Feb 18, 2021 India's foodgrain output to rise 2% in 2020-21 to record 303.34 million tonnes: Govt Govt clears Rs 7,350 crore PLI booster for production of laptops, tablets, PCs. After falling by 8.6 percent in the first half of the year, Swiss GDP rebounded with a 7.2-percent gain in the third quarter. But after infections surged again, cafes, restaurants, theatres, cinemas, museums and sports clubs were closed in mid-December and all non-essential shops followed a month later.
With Swiss firms struggling through another lockdown, the federal government last week finally loosened its purse strings a bit, doubling emergency aid to $11.2 billion as part of a programme to boost the economy.
READ MORE: EU lawmakers approve $815B recovery programme
But when he presented the package for companies worst hit by the latest Covid restrictions, Finance Minister Ueli Maurer again lamented that Switzerland had to borrow to boost the economy.
Some $11,16 in debt will have to be paid off within six years according to a constitutional debt brake rule, Maurer warned.
He promised to present various options to do so as soon as the economic outlook cleared a bit.
Despite mounting criticism that the wealthy Alpine nation isn't doing enough to support companies, Maurer has repeated time and again that the Swiss government has 'no money'.
The government is already borrowing '$134,44 a day, or $6,69 million, or $89,62 a minute,' he notes.
In 2020, Switzerland's federal government spent $16.7 billion to support the economy, and preliminary data shows it ended the year with a deficit of $17.6 billion.
READ MORE: Democrats pave way for approval of Biden's $1.9 trillion Covid package
Debt phobia
Some have called for Switzerland to put balanced budget dogma aside during the crisis, to protect against potential long-term economic damage.
'Switzerland could be much more generous,' said Michael Graff, an economics professor at ETH Zurich, a public research university.
He believes the country could borrow what it needed to boost business activity without a problem.
A study published by Graff in January argued the nation's post-crisis finances would remain healthy even if borrowing rose, primarily because the country entered the pandemic with one of the world's lowest debt ratios.
National debt stood at 25.8 percent of gross domestic product (GDP) at the end of 2019.
That was less than half the European Union's widely breached target of 60 percent.
According to Graff, if the Swiss debt ratio rose by 10 percentage points, or even 20, and 'if things take a turn much worse than expected' the country would still be at a level that is 'extremely low, compared to other nations, once the crisis is overcome'.
If Switzerland is in some ways a very liberal nation, Graff pointed to a 'public debt phobia' which he said was a cultural trait.
After debt soared at the end of the 1990s owing to a crushing real-estate crisis, Switzerland became a champion of fiscal rectitude, introducing a debt brake into its constitution in 2003.
READ MORE: US state proposes wealth tax on billionaires
'Irrational' fear
'This fear of going into debt is something irrational,' argued Cedric Tille, an economics professor at Geneva's Graduate Institute of International and Development Studies.
This is especially so, he said, because Switzerland currently benefits from negative interest rates, which means investors are willing to lose money to own Swiss 10-year bonds.
Former Swiss central bank vice president Jean-Pierre Danthine believes the country's debt brake rule should be suspended when the economy is facing a crisis.
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Mutools mux ul 7 74 download free. With negative rates, Switzerland can borrow 'all it needs for its economy', he said in a recent interview with Leman Bleu television.
The country did not suffer as badly as some European neighbours during the first wave of the pandemic moreover, and its economy has fared better.
It was able to ease restrictions faster and count on strong pharmaceutical exports.
The Swiss government rapidly implemented economic support measures and allocated $78 billion to finance partial unemployment benefits for workers and short-term business loans. Adobe zii 2019 v4 2 0.
After falling by 8.6 percent in the first half of the year, Swiss GDP rebounded with a 7.2-percent gain in the third quarter.
Spooked 2 2019
But after infections surged again, cafes, restaurants, theatres, cinemas, museums and sports clubs were closed in mid-December and all non-essential shops followed a month later.
Shops are slated to reopen on March 1, but some fear the shutdown will lead to a wave of bankruptcies at small- and medium-sized businesses.
'For the second wave, they should have distributed aid much earlier to cover lost revenue,' remarked Rafael Lalive, an economics professor at the University of Lausanne.
Todd’s uncle was one mean son of a biscuit. But long after he’s dead and gone, his descendants worry that his meanness might rub off on them. Snap presents a story crafted in the dark of night by Spooked.
Thank you, Todd, for sharing your story with us! Like Todd’s story? Check out his book, Country Stories of Ghosts and Bad Men.
Produced by Anna Sussman, original score by Renzo Gorrio
Artwork by Sanaa Khan
Listen to Spooked on Luminary! Spooked season 5 has 22 all-new episodes to keep you up at night. You can get a Luminary subscription for as little as $2.99 a month with their annual plan, plus a 7-day free trial to get started. Not available in all markets. Terms apply. Visit luminarypodcasts.com to learn more.
Producer Credit:
Original Score:
Artwork: Sanaa Khan
Original Score:
Artwork: Sanaa Khan