1′ reading
The Dbrs Morningstar agency confirms the BBB (high) rating for Italy with a stable trend. This is what we read in a note, which explains that Italy’s “economic fundamentals remain resilient” and the Pnrr supports growth.
The stable trend reflects DBRS Morningstar’s view that ratings risks are balanced. The impetus resulting from the implementation of Italy’s National Recovery and Resilience Plan (PNRR) in the coming years will likely mitigate the effects of the economic slowdown linked to the tightening of the ECB’s monetary policy.
The public debt-to-GDP ratio declined by approximately 13 percentage points, from a peak of 154.9% of GDP in 2020 to 141.7% in 2022, and is expected to decline further to 140.2% by the end of this year. This decline was significantly better than expected. However, future improvement in the debt trajectory will likely be limited by the negative impact of previous home improvement tax credits and a slow overall improvement in government finances.
This mainly comes from the fact that the government is planning modest fiscal easing by extending tax cuts. In this context, a medium-term fiscal strategy that keeps the public debt-to-GDP ratio on a downward trajectory is crucial to maintaining investor confidence.
In light of the gradual reduction of the shares of Italian public debt held by the European Central Bank (ECB) and the increase in debt issuances, support for Italian debt by Italian households should contain the increase in sovereign yields.
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2023-10-27 20:37:30
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