Government, the economy is growing, but the IMF is teaching us a lesson. Meloni silences the owls

The International Monetary Fund does not give up and puts us in the Pnrr. “The full and timely implementation of Italy’s Pnrr is necessary to increase productivity and relaunch potential growth”, reads the note drawn up by the Washington inspectors on our country. According to the monetary organization, the inexorable aging of the Italian population contracts the workforce, slowing down production. This would require “ambitious structural reforms that favor productivity”. The objective is to “reduce the traps of unemployment and inactivity, reduce informality” and, listen, listen, “avoid supporting companies in decline”.

Not only Pnrr, but also debt reduction. “A credible medium-term debt reduction plan would further mitigate the risks associated with the debt”, a note to which the Minister of Economy, Giancarlo Giorgetti, replied. “Public debt also increased in response to shocks from external sources. Now we have to deal with it and we are reducing. During the week we had a visit from a delegation from the International Monetary Fund who asked us for this reduction action. The commitment exists, it is part of our responsibilities».

As if that weren’t enough, the International Monetary Fund’s little lesson also included environmental policies. To achieve climate goals, the Lagarde institution proposes that Italy accelerate the transition to renewable energies, seeking independence from fossil fuels to also strengthen energy security. “While Italy met its energy needs in the winter of 2022-23, it must prepare for adverse scenarios in the coming winter, including a complete shutdown of Russian gas or further interruptions in hydroelectric power generation.” Washington also rejects the idea of ​​taxing the extra profits of big companies to “raise cash”. A new tax on banks’ extra profits could have “unintended consequences”. Because “it would tend to reduce interest rates on deposits, increase the cost of borrowing and reduce the amount of financial intermediation at a time when the volume of loans is already decreasing”. Washington economists don’t like the announced tax reform either. In Italy, “a reform of the tax system would be desirable to improve efficiency and fairness”.

The invitation is for the adoption of a tax model that “encourages employment, abolishes ineffective tax expenditures, strengthens revenue collection and safeguards progressivity”. There is a positive note, however. Forecasts indicate that Italy will grow by 1.1% in 2023 and 2024 and then accelerate further in 2025 also thanks to the support of the Pnrr, which will reach its spending peak that year. Inflation is also falling, but a return to the 2% target is only expected “around 2026”. In short, the data prove us right but, evidently, the IMF is not enough.

Source: IL Tempo

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