This is a document of great importance in the panorama of Italian public finance. It provides an annual review of the government’s economic forecasts, budgetary policies and policy objectives. Its importance lies in providing clear guidance for defining the annual budget and managing the economic and financial challenges that the country may face
The Nadef, acronym for “Update Note to the Economic and Financial Document”, plays a crucial role in the planning of the Italian government’s economic policy. It is a document of a programmatic and financial nature which is presented by the executive to the Chambers by 27 September of each year and has the task of updating the forecasts outlined in the Def (Economic and Financial Document), which constitutes the pillar of budget policies and spending choices. This information is fundamental for the definition of the annual budget maneuver and for the planning of economic policies in the short and medium term.
First step for the preparation of the Budget Law
This revision takes into account the new information and data available regarding the trend of both the macroeconomic context – such as estimates of gross domestic product (GDP), inflation, public debt and other key indicators – and public finances, that is, how much the government expects to collect in terms of tax revenues and how many public resources it intends to receive in the coming years. The Nadef in fact constitutes the first step in the development of the subsequent Budget Law, a document of crucial importance for the management of the country’s finances.
A document for reviewing economic forecasts
Changing economic conditions, in fact, often require a review of government objectives and priorities. The Nadef then provides the opportunity to adjust these objectives based on new information and emerging challenges. This means that the executive can adapt its policies to better address the needs of the economic-financial scenario in which it finds itself acting. Specifically, the document must outline the main sectors in which it is expected to intervene in the maneuver for the following three years, at the same time illustrating the financial effects envisaged by the Budget Law in terms of revenues and expenses, as well as the possible legislative projects connected to the maneuver itself.
The role of the European Union
The Nadef must also take into account the observations and recommendations of the European Union institutions. This is important to ensure the consistency of Italian financial policies with European standards. In this, the EU plays a significant role in monitoring and coordinating the fiscal choices of member states. Once the Nadef has been presented to the Italian Parliament, the government must send the Draft Budgetary Document (Dpb) to Brussels by 15 October and, shortly thereafter, the draft budget law by 20 October. These commitments are of considerable importance as they mark the official start of the budget development process. It is Parliament’s duty to approve the budget by 31 December, a crucial deadline to avoid the need to resort to temporary financing measures.