#Hearings #Def #Bankitalia #Court #Auditors #concern #increase #public #debt #Public #health #risk
Marathon of hearings on the Def before the joint budget commissions of the House and Senate. First to pronounce on the “Halved” economics and finance document, presented by Giancarlo Giorgetti last April 9th, it was the Bank of Italy. According to via Nazionale’s assessments, the forecasts for the Italian economy differ only slightly from the Def (+0.6% for Oil 2024 according to the Bank of Italy, +1% according to the government) but “the risks for growth remain oriented to the downside“Sergi saidor Nicoletti Altimarihead of the Economics and Statistics department of Bank of Italy citing among the international trade risk factorsthe effects of restrictive monetary policy on demand and the negative effects on construction sector from the superbonus reduction. “The contribution provided byfull and effective implementation of Pnrr investments it is more decisive than ever to achieve the development rates outlined in the government’s framework”, underlines Nicoletti Altimari.
As is known, the cost of the super bonus has weighed on the public accounts, which in 2023 is equal to 3.7 points of GDP or 77 billion, “5 times higher” what the Def 2023 calculated would accrue within the year. Bank of Italy therefore warns that “A further temporary extension of contribution relief (promised by Giorgetti,ndr) would increase uncertainty about the future evolution of public finances“. In this case the “deficit would be higher than the trend under current legislation by approximately one percentage point of GDP on average per year in the three-year period 2025-27, remaining above 3% in all years of the forecast horizon”. As for the health spendingthe central institute warns that in relation to GDP it would remain substantially unchanged until 2027 (around 6.3 percent). Looking ahead, however, any resulting pressure on healthcare spending will need to be carefully managed from the aging of the population“.
Read Also Economy | By FQ.
The International Monetary Fund: “In 2026 Italian growth will collapse to +0.2% due to the stop of the Superbonus and less stimulus from the Pnrr”
Court of Auditors – Still on the subject of public finances, the accounting magistrates warn that “If in the three-year post-pandemic period the improvement in the debt/GDP ratio was more significant than expected, there are many reasons that make the challenge of reducing the ratio in the short term and, above all, in the medium term”. The Court specifies that “for the purposes of protecting public finances and independently of European obligations and related surveillance, excessive debt positions end up exposing the economic system to risks of instability“.
For the Court anyway “favourable conditions there is no shortage of opportunities for a gradual and sustainable return.” The Def, however, warns in the hearing, scales back the estimate of privatizations compared to the Nadef and redefines the timing: these are now resources equal, cumulatively, to 7 tenths of GDP in the three-year period 2025-27, compared to estimates of 1 point of GDP in the three-year period 2024-2026. The Court highlights that “it would be important for the medium-term structural budget plan to give a detailed and detailed account of the role that they could and should have, in the government’s programmatic vision, active management policies for public assets in the next future; this is also in order to be able to appreciate the plausibility of the estimates and avoid the deviations that have often been recorded in the last five years between results and initial forecasts”.
“Managing public finances will continue to be difficult: it will be challenging to find the resources to meet the needs for unchanged policies; Furthermore, it will be necessary to identify the resources to meet sectoral needs (healthcare or assistance), for tax reform or even to support investments, especially those which, eliminated by the Pnrr or the Pnc, must find new coverage”, underlines the Court which also looks with concern at the public health. “The measures taken so far do not seem capable of structurally responding to the difficulties that now widespreadly characterize all public structures”, document the accounting magistrates, specifying that “the needs of the healthcare sectorlike others in the welfare system, will need to be carefully reconsidered to avoid compliance with spending trajectories results in progressive decay of the quality of public assistance or that prevents a complete (and much needed) reform of local assistance”.
The Court finally rebukes the government for the many amnesties. Legislative interventions recently introduced or in the process of being adopted they do not appear fully consistent with the need to induce greater tax compliance. Still on the subject of collection, the absence, in the draft legislative decree, of an effective strategy on the subject of compulsory collection must be noted”, he continues, recalling that he has “for some time reported the legal and organizational limits which hinder collection procedures”.
Istat’s assessment – The future prospects of Italian public finances are “weighed by uncertainties about the evolution of the economylinked above all to the unknowns of the geopolitical scenario”: this is what was highlighted by the Istat economists during their hearing. The Institute of Statistics therefore recalls how “it will be important to guarantee the full realization of public investments and the reforms envisaged by the Pnrr“. Italy ended 2023 with a deficit equal to 7.4% of GDP. Istat underlines a worsening of 0.2 points percentages compared to previous assessments. 2022 closed at 8.6%.
Parliamentary Budget Office – The “non-temporary” overcoming of 3% threshold in the deficit-GDP ratio the initiation of a procedure for excessive deficit against Italy is “very probable”, the PBO recalls in the hearing on the Def. “After a three-year decline in the ratio between public debt and GDP, the trend scenario of the Def envisages an increase from 2024 to 2026 for a total of 2.5 percentage points and a slight reduction of 0.2 percentage points only in 2027, reaching 139.6 percent”. “To reach by the end of the decade the pre-pandemic situation of 2019, when the debt was equal to 134.2 percent of the product, should be realized reductions in the ratio in the three-year period 2028-2030 equal, on average, to around 1.8 percentage points of GDP per year”, indicated the president of the Parliamentary Budget Office Lilia Cavallari according to which “A contribution to the attenuation of the debt growth trend – he underlined – will be made by the privatization plan, with a cumulative value of approximately 1 percent of GDP in the 2023-2027 horizon (0.7 in the 2025-2027 period)”.
