Italian government urged to exercise fiscal prudence amid high debt-to-GDP ratio
The head of the Bank of Italy’s Economics and Statistics Department, Sergio Nicoletti Altimari, called on Premier Giorgia Meloni’s government to exercise fiscal prudence during a parliamentary hearing on Monday. This appeal comes amidst concerns about Italy’s high borrowing costs and a fragile economy that could be further jeopardized by actions not in line with sustainable public finances.
Altimari warned of the potential for worsening financing conditions if fiscal responsibility is not maintained. He identified Italy’s high debt-to-GDP ratio, forecasted at 140% for both 2023 and 2024, as a significant vulnerability that could expose the country to financial-market tensions.
Italy’s recent plans indicate an intention to bring its deficit below the EU’s limit by 2026. This includes a projected deficit-to-GDP ratio of 5.3% this year and 4.3% next year, which would allow Premier Meloni to uphold her tax-cut promises. However, these new forecasts also anticipate slower growth, which could impact the country’s fiscal outlook.
Other euro nations are also grappling with similar challenges concerning EU fiscal rules. France and Spain are predicted to have deficits of 4.7% and 4.1% respectively this year.
Despite some optimism regarding the macroeconomic picture in Italy’s budget, Altimari stressed that promoting economic growth through structural reforms is the real solution to the country’s economic challenges.
