The public debt in Italy is on the rise, poised to surpass the psychological threshold of EUR 3 trillion next year, as outlined in the Economic and Financial Document (Def) approved by the government last week. According to the statistical publication "Public Finance: Needs and Debt" by the Bank of Italy, the debt increased by EUR 22.9 billion in February, reaching EUR 2.872 trillion. This rise is attributed to both the financial needs (EUR 14.1 billion) and the increase in Treasury's liquid assets (EUR 8.6 billion). Notably, the central government sector solely contributed to this increase, while the debt of local administrations and pension funds remained relatively stable. Looking ahead, the Def projections indicate that Italy's public debt will exceed EUR 3 trillion starting from next year. The estimated figures suggest a trajectory where the total debt would escalate to EUR 3.110 trillion in 2025, EUR 3.224 trillion in 2026, and EUR 3.306 trillion in 2027. However, a descending trend in the debt-to-GDP ratio is projected to commence in 2027.

Given Italy's high budget deficit and the modest growth forecast for the coming years, it is likely to fall short of aligning its public finances with the EU targets set to take effect this year. This shortfall may result in Italy, along with nine other countries including France, breaching the fiscal parameters of a deficit-to-GDP ratio of 3% and a debt-to-GDP ratio of 60%. Consequently, this could lead to sanctions from the European Commission. In response to these challenges, the Italian government aims to implement a seven-year plan to improve public finances. Finance Minister Giancarlo Giorgetti explained in the Def introduction that Italy intends to negotiate a seven-year fiscal adjustment plan with the EU. The rising public debt is heavily influenced by the cash repercussions of the superbonus in the coming years, as highlighted by Giorgetti. Additionally, clarity on how to account for the 2024 credits and stalled credits will be provided by Eurostat at the end of June, potentially altering deficit figures for both this year and the upcoming years. Currently, the government estimates a deficit ranging between 4.2% and 4.4%.

Source: https://www.avvenire.it/amp/economia/pagine/debito-pubblico-a-febbraio-2872-miliardi