Public debt exploded in October, reaching a new negative record of 2,867.7 billion. The Bank of Italy announced this by reporting an increase of 23.5 billion compared to the previous month. It is the alarm of investors who have been keeping their eyes on our country for a while, echoing not only on the upper floors of Palazzo Chigi but also in all financial markets.
All this only fuels the Spillover anxiety we sometimes experience when Prime Minister Meloni returns to demand the EU relax Stability Pact rules and more time to reduce the accumulated public debt. Then there is another open question: the ESM – the European Stability Mechanism, a default parachute in case our debt turns into waste paper. But let’s go in order.
New record in Italian public debt
The increase in public debt reflects the liquid assets of the Treasury (from 20.5 billion to 52.5 billion), the needs of public administrations (1.2 billion) and the impact of deductions, issue premiums and securities revaluation payback. While Economy Minister Giancarlo Giorgetti returns to talk about wars and epidemics for an explanation of this new record, Bankitalia explains this in detail.
Giorgetti: “When it comes to debt, care and attention are required”
“When we talk about the Italian economy, we cannot ignore that we are included in a wider context”: Recently “there have been a series of events affecting public debt. We are not in a normal period, but it is an abnormal situation and forces those who are most indebted to be prudent and careful”. Speaking in Atreyu, the minister said that “any action taken by the government must inspire credibility and seriousness, because every two weeks international financial institutions buy our debt and we pay more or less according to the credibility we have created.”
That’s why we have to be very careful about public debt, because “it is the bile of this country that takes the oxygen away from every policy aimed at development and growth. But Italy has an extraordinary internal strength,” Giorgetti said, adding: “The Italian economy has an incredible resilience, and that is an asset.” It needs to be supported as such.”
Gentiloni: “The challenge is to align debt reduction with growth”
European Union Commissioner for Economic Affairs Paolo Gentiloni also spoke about Italian public debt at the ‘The Europe We Want’ forum. “I think we have behind us an extraordinary response to the most serious economic crisis of the post-war period. We responded and managed to avoid recession. Our growth is low, but public investment is afloat and employment levels are among the highest. Then we have Pnrr”.
These are the positive notes, then the painful one: public accounts. “The issue of debt reduction is still open and important for our country. The important thing is to harmonize debt reduction with sustainable growth. We will see if the governments can reach an agreement with the new Stability Pact.”
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Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
