MNI: Italy Debt Drops to E2.2792 Trillion In August - BOI

--Italy State Revenues Rise In August, Up 3.2% Y/Y

By Silvia Marchetti

     ROME (MNI) - Italy's public debt fell slightly in August, falling to

E2.2792 trillion, while state revenues in the first eight months of this year

were 3.2% higher than for the same period in 2016, the Bank of Italy said

Friday.

     In their monthly statistical report, the central bank acknowledged that for

the first time in recent months, the country's elevated public debt is starting

to fall, though still at a very slow pace, as the economy's recovery

consolidates and the public finance adjustment path continues.

     Debt dropped by E21.3 billion in August, down from July's recent peak, when

it reached over E2.3 billion, said the BOI. Throughout this year, the debt curve

has been steadily growing, but Italy could now be at a turning point.

     Rome's government is trying to further tightening public finances, as the

euro area's third-largest economy continues to be stifled by the second-largest

debt volume on the Continent after Greece.

     Following a rosier growth outlook, with government forecasts upped to 1.5%

this year in the recently revised its fiscal targets for 2017-2020. Compared to

April, debt forecasts have been cut to 130% for this year a previous 132.5%, to

130% in 2018 from 131%, 127% in 2019 from 128.2% and to 123.9% in 2020 from

previous 125.7%.

     Italy, however, remains under the scrutiny of the European Commission for

its outstanding public debt due to potential stability risks linked to an

"excessive economic imbalance", which would lead to a deviation from fiscal

targets and possible fines.

     In February, Brussels requested Rome implement additional fiscal measures

to avoid being sanctioned.

     Italy's Finance Minister, Pier Carlo Padoan, has repeatedly reassured the

European Commission that Rome's government will further tighten public finances

by adjusting the structural balance by 0.3% of GDP in 2018. This fiscal

commitment will be at the core of the upcoming 2018 budget approval.

     The European Commission has, however, acknowledged Rome's efforts in

balancing growth targets and fiscal sustainability. The EC has said it will take

into account reform and budgetary efforts when assessing Rome's budget in

autumn.

     According to the BOI report, the August decrease in debt was due to a E22.2

billion fall in the Treasury's liquid assets to the current E63.4 billion level,

mainly compensated by a E0.5 billion rise in spending by local bodies and by the

overall effect (E0.4 billion) of the revaluation of inflation-protected

securities and variations in exchange rate.

     In August monthly state revenues stood at E45.5 billion, E11.5 billion

higher than a year earlier. In the first eight months of 2017, total revenues

amount to E278.6 billion, registering a 3.2% annual rise, said the central bank.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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