FILE PHOTO: Italys Prime Minister Giorgia Meloni speaks during a press conference on the day of the Euro-Mediterranean Summit (EU-MED9) in a resort near Paphos, Cyprus, October 11, 2024. REUTERS/Yiannis Kourtoglou/File Photo
ROME: Italy’s Prime Minister Giorgia Meloni said she would lead the government responsibly until the end of its mandate as parliament debates a budget aimed at supporting the eurozone’s third-largest economy while trimming its debt.
Rome, which was put under the European Union’s excessive deficit procedure this year, hopes to bring its deficit below the block’s 3% of gross domestic product ceiling in 2026 from 3.8% targeted this year and 7.2% last year.
Italy’s parliament, in which Meloni holds a large majority, will today begin a debate on the 2025 budget, which must be approved by Dec 31.
“Each of us is aware of the responsibility we have on our shoulders, and we will honour to the last day the task given to us by the Italians in this nation,” Meloni said at a meeting of her Brothers of Italy party in Rome.
Ratings agencies Fitch and DBRS upgraded Rome’s outlook to “positive” from “stable” in October, citing an improved financial path.
Investors consider the country’s high bond yields as attractive given the stable political situation and the likelihood the European Central Bank continues to cut rates.
The premium investors pay to hold Italian government bonds over top-rated German ones narrowed last Friday to around 113 basis points, from more than 240 basis points on Sept 26 2022, when Meloni’s coalition won the general election.
The positive sentiment in the Italian bond market contrasts with neighbouring France, whose political crisis is seen as an obstacle to reducing its deficit, leading to a credit rating downgrade by Moody’s.
Meloni, who announced her resignation on Sunday as president of the European Conservatives and Reformists (ECR) party, said the stability of her government was Italy’s “greatest element of strength” because it “guarantees international credibility”.
But despite falling annual budget deficits, Italy’s debt, which is proportionally the second-highest in the 20-nation bloc, is forecast by Rome to climb from 134.8% of gross domestic product last year to 137.8% in 2026, before gradually declining. — Reuters
