Moody’s rating agency has creditworthiness Italy improved for the first time in 23 years. The agency announced that the country’s credit rating will now be rated Baa2, not Baa3. Moody’s cited the country’s ongoing political stability as its justification. Italy is also making good progress in implementing its national recovery and resilience plan.
Economy Minister Giancarlo Giorgetti was pleased: “This is further confirmation of the return of confidence in this government and also in Italy.”
Italy’s deficit could fall prematurely
The government in Rome estimates the budget deficit will fall below three percent of economic output this year. This would allow Italy to leave EU procedures due to excessive deficits by mid-2026. “We expect Italy’s high public debt to decline gradually from 2027,” Moody’s said.
However, due to ongoing challenges, the agency downgraded Italy’s future credit outlook from “positive” to “stable”. This reflects a balance between strengths and ongoing challenges such as an aging population.
For decades past, Italy was considered a hotbed of political instability. The country had 69 governments in the nearly 70 years of the postwar republic, with 31 prime ministers ruling for an average of 1.1 years. Since the right-wing populist Prime Minister Giorgia Meloni However, the Italian government came to power in October 2022 and is stable.
A better credit rating would benefit the government
Moody’s last raised Italy’s credit rating more than 20 years ago, in May 2002. The rating has not changed since the downgrade in October 2018. Moody’s has a total of 21 rating levels to assess the creditworthiness of countries and companies. Aaa the best value, C the worst value.
A better credit rating is an advantage for countries because they can expect to pay lower interest rates on their government bonds. In other words: you can then take out debt on the capital markets more cheaply.
