MNI: Italy Public Debt Climbs To E2.2799 Trln In Jan - CenBank

By Silvia Marchetti

     ROME (MNI) - Italy's public debt rose E23.8 billion in January to E2.2799

trillion, while state revenues fell by E1.6 billion compared to the same period

in 2017, the Bank of Italy said on Thursday.

     In its regular monthly statistical report, the central bank acknowledged

the erratic pace at which public debt was rising, despite the pick-up in growth.

     Overall, 2017 saw a net E36.6 billion rise in debt. Despite monthly ups and

downs, for the first time in years, the rate of Italy's debt increase was

finally slowing, with the debt curve stabilizing.

     The Rome government is trying to further tightening public finances, as

Europe's third-largest economy continues to be stifled by the union's

second-largest debt by volume.

     With a rosier growth outlook, the government recently revised its fiscal

targets for 2018-2020. Debt forecasts have been cut to 130% this year from 131%,

to 127% in 2019 from 128.2%, and to 123.9% in 2020 from previous 125.7%.

     However, the medium-term objective (MTO) of a structural balance has been

more than once delayed and it is now forecast be reached only in 2020, according

to Italy's Treasury.

     --BRUSSELS SCRUTINY

     Italy remains under 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 onto

possible fines.

     Brussels has requested Rome implement additional fiscal measures to avoid

being sanctioned.

     Italy's current 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 percent of GDP in 2018.

     The European Commission has acknowledged Rome's efforts in balancing growth

targets and fiscal sustainability. In November the EC gave an initial green

light to Italy's 2018 budget but postponed its final assessment to May, saying

it will take into account both reform and budgetary efforts. The outcome of

Italy's election could alter these dynamics.

     According to the BOI report the January increase in debt reflects a E25.2

billion rise in the Treasury's liquid assets to a current E54.5 billion level,

only partly compensated by local bodies' E1.2 billion surplus cash. The

revaluation of inflation-protected securities and variations in exchange rate

have instead contributed in containing debt by E0.2 billion.

     In January, monthly state revenues stood at E33.7 billion, E1.6 billion

lower than a year earlier, the central bank said.

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

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