Public debt, Visco: “After 2026 it can rise”. Giorgetti: “It’s our weak point”

The Minister of Economy and the governor of the Bank of Italy, on his last day in office, spoke on the occasion of World Savings Day. “The Italian spread also rises due to international tensions, but there is fear about the situation in our country,” declared Visco. “Despite the difficulties we managed to hold on. If we manage to avoid the risk of a new global recession, we will soon be able to reduce the debt,” said Giorgetti

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Europe, public debt and the Budget, which reached the Senate yesterday. These were the topics touched on at World Savings Day. Among the first to speak was Vincenzo Visco, governor of the Bank of Italy and his last day as number one at Palazzo Koch. “It has been an honor to speak at World Savings Day for 11 years. They have been complex, demanding and difficult years”, he said. The Minister of Economy Giancarlo Giorgetti also spoke at the World Savings Day, declaring: “We must not underestimate the issue of public debt, it is our weak point. It is the alarm went off: more debt means more spending on interest and resources taken away from the support of business families. It’s an equation that isn’t always clear.”

Spreads and public debt

The governor of the Bank of Italy photographed the current Italian economic situation. “Our surveys and qualitative indicators continue to point to widespread weakness in manufacturing activity; despite the good performance of tourism, the strong post-pandemic recovery seems to have come to an end in services”, he said. Visco then warned that there are risks hovering over the economic estimates “oriented towards the downside, especially due to the worsening of geopolitical tensions and the tightening of financing conditions”. For this reason, underlines the number one at Palazzo Koch, “Italy’s spread also rises due to global factors and not just specific to our country. The problem is that the effect on public debt securities was greater than that of other countries, probably because investors fear for Italy’s development capacity and perceive that, also for this reason, public debt is not yet in balance. ”. As Visco underlined, “over the next three years the decline in public debt expected in the Government’s programs is marginal; in 2026 the debt would be equal to just under 140 percent of GDP. Subsequently, in the absence of interventions, the ratio risks rising”. This risks being a problem, given that “Italian families entrust to the State, by subscribing to public debt securities, a significant portion of their wealth. Like any good debtor, the public broadcaster also has the duty to make good use of it and return it in the promised ways and times”. The reason why many savers have decided to purchase government bonds is clear: “The very limited transmission of the increases in official rates to the remuneration of sight deposits, in Italy as in other countries in the area, has pushed savers to purchase bonds government bonds. In the first six months of this year, in particular, there were over 70 billion in net purchases of public debt securities, a very high value in historical comparison”.

The government’s analysis

Giorgetti also expressed his opinion on the topic of public securities. “I am satisfied with the more than positive response that Italians have given to the placement of public securities, specifically intended for small savers. This is a very important signal, of a relationship that must be inspired by the utmost correctness and mutual trust between savers and the State and which is part of a broader strategy aimed at placing a large part of the public debt within our country as it should be”, declared the head of the Ministry of Economy, who obviously did not shy away from an analysis of the Budget Law, recently passed in the Senate. “The Government had to make painful choices also remedying serious mistakes made in the past. I guarantee you that it was not easy, in the discussion within the executive, to skim off the various requests, all legitimate, but we decided to favor support for the less well-off classes”, declared Giorgetti. An attempt was made to proceed, he added, with the utmost caution: “The ongoing negotiations coincide with the obligations connected to the definition of the budget maneuver for which the Government intended to adopt a cautious and prudent approach”. However, according to the Minister of Economy, “the Italian economic system, despite all the difficulties, has managed to hold up in the face of the concomitance of many critical factors. If we manage to avoid the risk, which does not seem entirely unlikely, of a new global recessionary phase by ensuring acceptable growth rates, we will realistically be able to progressively reduce the burden of public debt”.

Pnrr and European policies

Europe was also among the topics touched upon. On this topic, Visco reserved a few words especially for the Pnrr and European policies. “Simple, targeted changes to the National Recovery and Resilience Plan, aimed at increasing its effectiveness, remain possible, even if it is necessary to proceed without excessive delays”, declared the number one of Via Nazionale. There remains an opportunity to be exploited, given that “this opportunity, offered by the implementation of the projects contained in the Pnrr and the reforms that are part of it, which focus precisely on these delays and on the decisive start of the green and digital transition of our economy , is unprecedented.” More generally, Visco highlighted how it is necessary to “put in place the conditions so that savings, not only national ones, can find adequate outlets in private investments in Italy; Likewise, public resources, European ones, must be used to lay solid foundations for a return to a stable path of sustained growth”. Giorgetti also spoke on the European issue, complaining of a lack of community consensus on the Italian proposal to review the rules of the EU Pact. “We have asked to recognize adequate space for certain types of investment expenditure, with particular reference to the very substantial ones which are involving our economic systems in difficult transitions and in relation to the greater security and defense needs, but for the moment the proposal does not find broad consensus. However, we will continue to reiterate it forcefully and not for opportunistic reasons”.