MNI BRIEF: Italy Needs Credible Path To Lower Debt Ratio-Visco
The Bank of Italy chief has sounded a warning ahead of any plans for excessive spending by the new government.
Rising borrowing costs make it more pressing for Italy to “outline a realistic path” to reduce its ratio of debt to GDP, said Bank of Italy Governor Ignazio Visco, in comments which will be interpreted as a warning to new PM Giorgia Meloni as prepares new spending plans. (See MNI: Italy's Coalition Eyes Bigger 2023 Deficit Target-Sources)
A credible fiscal plan would ease funding costs and make it easier to achieve budgetary targets, the governor said in a speech, adding that the fiscal margin for packages to cap energy costs for households and businesses is “much more limited” than over the last two years.
The European Central Bank needs to continue hiking to reach its 2% inflation target in the medium term, although it should also bear in mind the “fast deterioration” of the economic outlook and financial stability risks, Visco said.