Italian Government Urged to Exercise Fiscal Prudence Amid High Debt-to-GDP Ratio
Bank of Italy Calls for Fiscal Prudence
The head of the Bank of Italy’s Economics and Statistics Department, Sergio Nicoletti Altimari, has called on Premier Giorgia Meloni’s government to exercise fiscal prudence. During a parliamentary hearing on Monday, Altimari emphasized the need for sustainable public finances and expressed concerns about Italy’s high borrowing costs and fragile economy.
Warning Against Worsening Financing Conditions
Altimari highlighted the potential for worsening financing conditions if fiscal responsibility is not maintained. He identified Italy’s high debt-to-GDP ratio, projected at 140% for both 2023 and 2024, as a significant vulnerability that could expose the country to financial-market tensions.
Italy’s Plans to Reduce Deficit
Italy has outlined plans to bring its deficit below the EU’s limit by 2026. The projected deficit-to-GDP ratio for this year is 5.3%, followed by 4.3% next year. These measures would enable Premier Meloni to fulfill her tax-cut promises. However, slower growth forecasts could impact the country’s fiscal outlook.
Similar Challenges in Other Euro Nations
Italy is not alone in facing challenges related to EU fiscal rules. France and Spain are also predicted to have deficits of 4.7% and 4.1% respectively this year.
Promoting Economic Growth through Structural Reforms
While there is some optimism regarding Italy’s macroeconomic picture in the budget, Altimari stressed that promoting economic growth through structural reforms is the real solution to the country’s economic challenges.
This article offers insights into the call for fiscal prudence in the Italian government and the potential risks associated with high debt. It highlights Italy’s plans to reduce its deficit and the challenges faced by other euro nations. The importance of promoting economic growth through structural reforms is also emphasized.
