The stability of the government “limits political risks”, but the high debt weighs
The agency Fitch confirmed Italy’s BBB rating with a stable outlook. The basis for the decision, it is explained, is Italy’s large, diversified and high added value economy, which is however contrasted by “weak macroeconomic and fiscal fundamentals”, in particular with “a very high public debt, a relatively loose fiscal policy post-pandemic, limited economic growth potential and, more recently, higher government bond yields.
The Stable Outlook reflects Fitch’s estimate that government debt-to-GDP will stabilize over the next few years around the end-2022 level as the stability of the governing coalition “limits political risks.” But Fitch highlights how “the significant easing of fiscal targets has weakened the deficit adjustment path, with associated risks of higher yields on new debt issuance and non-compliance with EU fiscal rules.”
Source-www.adnkronos.com