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Italy warned to bring d8k8ebt under control

拜登:我看起来只有40岁 | 8k8 | Updated: 2024-07-15 20:39:43

Italy's Prime Minister Giorgia Meloni [Photo/Agencies]

Italy's government has been issued with a stern warning to get its finances in order after it was revealed its public debt is on course to be 145 percent of the country's GDP.

The blunt message was sent by the International Monetary Fund, or IMF. It noted that Italy's economy had shown resilience in how it had recovered from the twin challenges of rising energy prices and the pandemic, but in 2023, GDP growth slowed to 0.9 percent, with just 0.6 percent year-on-year in the first quarter of this year, and 0.7 percent forecast for 2025.

High levels of public debt are not conducive to private sector investment, and IMF forecasts show debt is on track to be 140 percent of GDP this year, and 145 percent in 2025.

"In recent years, Italy has recorded a relatively strong recovery which, together with the inflation surprise, has temporarily improved the fiscal outlook," said the IMF's Fiscal Affairs Department director, Vitor Gaspar.

"But going forward, the dynamics are not favorable, with economic growth projected to slow down and then recover, but remaining lackluster, at the same time that the effective cost of financing debt will go up".

In addition to wider economic challenges faced by all countries, Italy has one of the lowest birth rates in the European Union, with its population aging much faster than many of its neighbors, storing up more future challenges.

Government statistics quoted by the Euronews website show that the average number of children per woman in Italy has dropped from 1.24 in 2022 to 1.20 in 2023, and at the current rate, by 2030 the population could fall by almost one million, to 59 million.

Unless significant adjustments are made, the IMF warned, the economy's limited breathing space could make it vulnerable to disruption of supply chains or extreme movements in commodity prices caused by global events such as regional conflict. What it called "faster-than-planned fiscal adjustment" was "warranted", it added.

Earlier this year, Italian Prime Minister Giorgia Meloni announced highly contentious plans to sell off the country's postal service, which she had previously declared as a "crown jewel" that must stay in state hands, in a bid to tackle the debt challenge.

Stakes in rail company Ferrovie dello Stato and energy giant Eni could also become available, as well as those in Poste Italiane, which is involved in insurance and banking, and makes major profits.

It is believed Meloni's right-wing government would hope to raise around 20 billion euros ($21.7 billion) by 2026 by selling off a stake in the postal company. "We can sell some stakes in public companies without compromising public control," she said.

But Nicola Nobile, chief Italian economist at Oxford Economics, called partial privatizations "just a drop in the ocean — they do not reduce the risk of seeing the debt increase … they are not a structural remedy; they don't alter the big picture".

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