Italy ‘vulnerable’ to debt financing conditions – EC – English

(ANSA) – Rome, 22 November – The European Commission said Italy, along with eight other EU member states, was “vulnerable” to its debt-financed situation in the medium term.

Rome could face “high risks to its fiscal sustainability,” said the Alert Mechanism report.

“Countries with the highest debt ratios are particularly vulnerable to changes in their funding situation. In a scenario where the growth-interest rate differential increases by 1 percentage point, Italy’s debt could exceed 10 percentage points of GDP by 2023. , Greece, Spain, Portugal”.

“In Italy, concerns related to the high public debt/GDP ratio remain unchanged,” the report added.

Debt “remains high,” having fallen to 150.3% of GDP in 2021, but “is expected to remain well above 2019 levels.”

The deficit narrowed to 7.2% in 2012 and is “expected to continue narrowing. However, yield spreads are “significantly” outside the Eurozone average and funding costs have increased. “Risks to fiscal sustainability are high in the medium term,” the commission said.

Italy is one of 10 countries to return to the European Commission’s watch over extreme macroeconomic imbalances.

According to the analysis conducted by European executives in the Alert Mechanism Report, a detailed review (detailed review) should be taken to assess the development of the situation.

In total, there are 17 Member States undergoing detailed reviews. Besides Italy, countries already surveyed include France, Germany, Greece, the Netherlands, Portugal and Spain. Czech Republic, Baltic States, Hungary, Luxembourg and Slovakia are currently participating.

Photo: Paolo Gentiloni, Commissioner for Economic Affairs (ANSA).