GLOBAL FINANCIAL CRISIS
Debt-laden San Marino weighs seeking IMF lifeline
Rome — The tiny state of San Marino, whose banks are crippled by bad debts, will decide by the end of 2018 whether to ask the IMF for a loan of about €300m and to start issuing bonds, its secretary of state says.
The state of 34,000 people landlocked inside Italy has yet to recover from a deep recession caused by the global financial crisis a decade ago. Its banks are swamped with bad debts of €1.7bn — 117% of the former tax haven’s 2017 gross domestic product (GDP) of €1.45.
Although San Marino is less than 15km across, it has six banks, a legacy of its days as a discreet place for foreigners, especially Italians, to park their savings. Its central bank estimates that 37% of the nation’s problem loans are in its worst category of bad debts.
"We’ll define our plan for financial stability by the end of the year. It could envisage an IMF loan of around €300m," secretary of state for foreign affairs Nicola Renzi said.
Apart from moving towards a loan request to the IMF based in Washington, the republic is also considering sovereign bonds for the first time
"We are a state and we can well decide to do it in the framework of the stability plan," Renzi said, stressing that San Marino is committed to keeping its debt, currently at around a quarter of the country’s output, below the 60% ratio.
Renzi said that state-owned Cassa di Risparmio di San Marino should merge with other lenders and rethink its business model.