"The incidence of 'Italian' public debt on output over the next three years would mark only a marginal reduction, with risks tending to rise".
This was stated by the Bank of Italy in its latest economic bulletin.
"According to the new public finance targets - updated by the Government at the end of September - in 2023 net debt and debt to GDP would continue to decrease and would stand at 5.3 and 140.2 percent respectively", recalls Bankitalia, explaining that "an expansion of the deficit compared to the current legislative framework of about 2024.0 percentage points of output is planned for 7. Net borrowing would gradually decline over the next few years, to 2.9 percent of GDP in 2026.
"In particular, the government's target for the NADEF end-of-horizon ratio is 139.6 percent.
According to the plans, in the coming years the positive effects of the differential between growth and the average debt burden and the primary balance - which would gradually return to surplus - would only be able to offset the negative impacts of a significant stock-flow component", explains Bankitalia in its latest bulletin on the debt-to-GDP ratio.
"The latter is influenced upwards by the offsetting use of tax credits for construction and downwards by the planned reduction in Treasury liquidity stocks and by proceeds from privatizations (for at least one percentage point of GDP over the three-year period). As evidenced, however, by analyses included in the Nadef - adds the Bank of Italy - for the downward dynamics of the relationship between debt and GDP, non-negligible risks remain both in the short and in the medium and long term. These must be countered not only with public finance action but also with reforms capable of strengthening potential growth", concludes Bankitalia.
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