MNI: Italy Public Debt Rises To E2.302 Trln in March - CenBank

By Silvia Marchetti

     ROME (MNI) - Italy's public debt climbed E15.9 billion to E2.3023 trillion

in March, while state revenues stood at E91.7 billion in the first quarter of

the year, the Bank of Italy said Tuesday. 

     In a monthly statistical report, the central bank acknowledged the erratic

pace at which public debt was rising, despite growth consolidating in the

country and public finances' continuing on their adjustment path. 

     Last year ended with a total E36.6 billion overall increase in public debt

levels. Despite a few monthly ups and downs, for the first time in years the

rate of Italy's debt increase was finally slowing down and the debt curve

stabilizing. 

     Rome's current government is trying to further tighten public finances, as

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

second-largest debt by volume. 

     -BANK RESCUE

     But in its recently revised fiscal plan, Rome raised debt forecasts for

this year to 130.8% due to THE "exceptional, one-off" public rescues of ailing

banks. 

     The medium-term objective (MTO) of a structural balance has been more than

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

Italy's Treasury. 

     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 to implement additional fiscal measures to

avoid being sanctioned.

     --BRUSSELS CONCERNS 

     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% of GDP in 2018, though Rome

and Brussels "weigh" the fiscal target in different ways. These positions could

all change with an incoming alliance of Five Star Movement and Lega.

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

targets and fiscal sustainability. In November the EC gave a first green light

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

it will take into account both reform and budgetary efforts. However, there will

undoubtedly be concerns in Brussels as to how those plans may change moving

forward. 

     According to the BOI report the March increase, due to a E20 billion

borrowing requirement of public bodies, was partly compensated by E3.5 billion

drop in the Treasury's liquid assets down to a current E44.8 billion level. 

     The revaluation of inflation-protected securities and variations in

exchange rate have also contributed in containing debt by E0.8 billion. 

     In March monthly state revenues stood at E28.5 billion, while in the first

quarter of this year a total E91.7 billion flowed into the public coffers,

slightly higher compared to the same period in 2017, said the central bank. 

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

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