Moody’s Ratings raised Italy’s rating took it from ‘Baa3’ to ‘Baa2’. The outlook changed from positive to stable. The international rating agency announced this in a statement.
THAT’ranking increaseMoody’s pointed out, reflects “proven continuity of political stability and economic policy, which increases the effectiveness of economic and fiscal reforms and investments implemented as part of the National Recovery and Resilience Plan (Pnrr). This also suggests the possibility of further policy interventions to support growth and fiscal consolidation after the plan expires in August 2026. Therefore, we expect Italy’s high public debt burden to start to decline gradually from 2027.”
THAT’The stable outlook, the rating agency underlined, reflects “a balance between Italy’s strengths and critical creditworthiness points. On the one hand, reforms aimed at improving the efficiency of the public sector and the overall business environment could result in a more significant improvement in Italy’s growth prospects, having a positive impact on public finances. On the other hand, reducing Italy’s high debt depends on relatively strong GDP growth and an increase in the primary surplus. This means that slower growth or less clear fiscal consolidation than we currently expect would jeopardize our estimates of debt reduction.”
Italy, Moody’s underlined, “is making good progress in achieving Pnrr’s milestones and goalsbeing the most advanced EU country in terms of the number of requests and disbursement of payments. We estimate that Italy will be able to make full use of the allocated funds, amounting to a total of 194.4 billion euros (9.1% of GDP in 2023), of which 71.8 billion euros are grants and 122.6 billion euros are loans. Although funding allocations have slowed due to capacity constraints and absorption constraints, delaying the positive impact on growth compared to initial estimates, public investment has increased in recent years.”
“A strong banking sector, a solid private sector balance sheet and a good external position are other factors that support economic stability”the rating agency added. “These positive elements mitigate, but are unlikely to completely offset, the negative impact on growth potential of population aging.”
Moody’s targets a debt-to-GDP ratio of “slightly above 130% by 2034”starting from our forecast of 136.5% for 2025.
Giorgetti: “Confirmation of newfound confidence in this government and country”
“We are satisfied with Moody’s promotion, the first after 23 years. A further confirmation of the newfound confidence in this government and also in Italy”, commented in a note from Minister of Economy and Finance Giancarlo Giorgetti.
