ROME: The expected decline of Italy’s public debt this year will mark a turnaround for the euro region’s third-biggest economy, changing financial markets’ skeptical view of the country, Finance Minister Pier Carlo Padoan said.
“Given real growth and possibly given a bit more inflation, that is beyond our control of course, we will see dynamics of the debt accelerating downwards,” Padoan said in an interview with Bloomberg in Rome on Monday. “This will change the perception of the markets.”
Padoan and Prime Minister Matteo Renzi have implemented growth-friendly policies and reined in public spending to reduce Italy’s public debt, which rose to 2.21 trillion euros ($2.47 trillion) in November, the euro region’s second-biggest after Greece when measured against gross domestic product. They also plan sales of state-owned assets totaling an annual 0.5 percent of GDP.
The debt will fall to 132.4 percent of GDP this year from 132.8 percent in 2015, the European Commission said in its winter forecasts on Feb. 4. That would be the first decline after eight years of growth in the debt-GDP ratio.
The Commission testified to “the fact that we are seeing a lower debt-to-GDP ratio in 2016,” said Padoan, 66, a former chief economist at the Organization for Economic Cooperation and Development who was chosen almost two years ago by Renzi as Italy’s finance minister.
