Mario Draghi
Photographer: Alessia Pierdomenico / Bloomberg
Photographer: Alessia Pierdomenico / Bloomberg
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Italy’s debt will exceed the country’s previous record in the aftermath of World War I, and the debilitating cost of the coronavirus pandemic on the eurozones third largest economy.
The new lending figures of 159.8% of gross domestic product appear in a fiscal outlook ratified by Prime Minister Mario Draghi’s cabinet on Thursday. It exceeds the probable record of 159.5% achieved in 1920, shortly before the era of Benito Mussolini’s fascist dictatorship.
Record charge
Italy’s debt rises to the highest level ever
Source: Bloomberg News and Government Plan
The economic update also confirms a lower growth forecast of 4.1% this year, with a target of 4.5% once stimulus and other measures have been taken into account, according to a government official. It expects a budget deficit of 11.8%, which will increase loans by another billion euros to protect citizens and businesses from the fall of the pandemic.
The figures are the first complete set of economic forecasts compiled since Draghi came at the helm of Italy’s response to the coronavirus, which killed more than 115,000 people and led to the closure of key sectors such as tourism. The government has agreed to borrow 40 billion euros ($ 48 billion) for new incentives, bringing its overall pandemic spending to more than 170 billion euros so far.
Read more: Draghi chases through plans to borrow until $ 48 billion More
Italy’s spending is for the time being backed by the European Central Bank, which buys government bonds to keep distributions between countries under control and significantly reduce pandemic-era debt.
As sobriety is pushed far below the line to allow the government to focus on rebuilding the economy, the growth in growth fueled by stimulus measures from the national and European Union should help to help Italy’s finances, from next year.
According to forecasts, the deficit will be reduced to 5.9% of GDP, while the debt should shrink to 206.3% of production in 2022. The government does not plan to have the deficit yield below 3% of production by 2025, according to a draft seen by Bloomberg. The debt is expected to return to the pre-crisis level of 134.6% by the end of the decade.
In recent days, restaurants and other business owners have clashed with police in Rome amid protests easing conditions of exclusion and more economic support. Elsewhere, protesters blocked highways as they pushed for a faster reopening of the country.
The government has indicated that it will only start facilitating some measures later this month, with a focus on outdoor activities.
Vaccination push
Draghi has increased the pressure on local governments to speed up their vaccinations, especially by focusing on senior citizens. But his government is struggling to reach a target of 500,000 shots a day by the end of the month.
In line with other EU countries, Italy maintains the vaccine doses Johnson & Johnson and is canceled by people planning to Astra Zeneca Plc shot amid reports of rare cases of blood clots.
Health Minister Roberto Speranza has told lawmakers that the AstraZeneca vaccine is as effective and safe as any other vaccine currently in use in Europe. Commenting on the review of Johnson & Johnson’s vaccine, he said: “we hope is that there may soon be elements of clarity that enable us to use a vaccine that will be important to our campaign. ‘
– With the assistance of John Follain, Giovanni Salzano and Zoe Schneeweiss
(Updates with prospects at the end of the decade in the seventh paragraph)