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As expected the day before, the new season of ratings on Italian debt also starts with a confirmation: the opener was S&P Global Ratings, which on Friday evening confirmed the triple B rating with a stable outlook in line with the decisions of last autumn .
The debt is rising
Compared to a few months ago, the perspective of the debt has changed, now seen as rising by 2.5 percentage points in its ratio to GDP between this year and the next two. But the decline of the last three years, which cut the weight of the deficit by 17.6 percentage points compared to the peaks of 2020, was decidedly faster than any forecast, also due to the umpteenth upward revision of the Italian gross product made by the ‘Istat in March; and the change of direction expected now, before the return to the downward path starting from 2027 and then in a more decisive way from the following year, is the result of the past, which leaves in this three-year period a debt legacy of over 40 billion for the use of the amount of tax credits generated by building bonuses.
Growth prospects
What decides on the prospects is above all the pace of Italian growth, which is not exciting but remains around 1% per year and can benefit from a Pnrr which has now reached the stage of actual spending after the long gestation of tenders and projects. Everything, then, takes place in a scenario suspended by the many international unknowns, which advise international evaluators not to sink the blow, and by a framework of community fiscal rules still being defined in its crucial operational aspects.
The match with Brussels
The limbo of public accounts, certified by the Economic and Financial Document just approved by the Government, limiting itself to the current legislation without venturing into the hypothesis of new economic policy interventions, is destined to really end in September; when Italy will have to reveal its cards and agree with the EU Commission on the first structural fiscal plan, i.e. the debt repayment plan over a 7-year horizon envisaged by the reform of the Stability Pact. There the next steps for the public finances will really begin to become clear, and the real levers in the Government’s hands to revive the growth essential to keeping public debt at bay. The real judgments will follow closely in the autumn ratings round. In the meantime, the calendar shows the next appointments as April 26th with Dbrs (BBB-high with stable outlook), May 3rd with Fitch (BBB, stable outlook) and May 31st with Moody’s (Baa3 with stable outlook).
