Italy is among the group of countries where public debt is expected to rise the most, and among these countries, it is the country with the highest debt (more than 134% of GDP). The International Monetary Fund believes that delaying intervention in the accounts is “costly” because it “will increase the size of the required adjustment.”
After recent crises, from Covid to the energy shock, global public debt has become very high. Very much The International Monetary Fund titled its financial monitor, published yesterday, “Reining in Public Debt.” The International Monetary Fund expects global public debt to exceed $100 trillion this year (93% of GDP) and will continue to rise to 100% in 2030. There are two elements that add to this negative scenario.
On the one hand, there is pressure to increase public spending to address major challenges such as the green transition, aging populations and security, and on the other hand, experience shows – says the IMF – that macroeconomic forecasts tend to underestimate public debt.: After three years, GDP is 6 points higher than expected on average. The combination of these two elements indicates that risks are skewed to the upside, and therefore governments must prepare fiscal plans that are much more decisive than those currently envisaged to stabilize or reduce debt.
Italy is in an unenviable position: it is in the group of countries – along with Brazil, France, South Africa, the United Kingdom and the United States – where public debt is expected to rise the most. (As the Meloni government attests in the newly approved Structural Budget Plan) Among these countries, it is the country with the highest debt. Above the risk threshold for advanced economies referred to in 134% of GDP. The silver lining here is that with inflation falling and the ECB easing monetary policy, there is scope to manage fiscal adjustment better and more decisively.
As the International Monetary Fund says, for countries like Italy “Delay is costly” because “it will increase the amount of adjustment required.”It is also “risky” because it could “provoke negative reactions” and expose the country to possible negative shocks. The Minister of Economy, Giancarlo Giorgetti, should request a reading of the IMF assessments to overcome resistance in the government and in the majority to his budget policy, which is as prudent as it is mandatory.
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