OECD gloomy on Italy's finances
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Continuing political and economic uncertainty took the lira lower against other European currencies yesterday. It closed at 1,054 against the mark despite Italy's new government winning a confidence vote.
A report published by the Organisation for Economic Co-operation and Development said the government's finances were ``unsustainable''.
The annual health report on the Italian economy from the industrial countries' think tank said that despite a strong recovery and heroic cuts in government spending programmes, the budget deficit increased last year. It rose to 154,000 billion lire, after falling in 1993. A surplus of revenues over spending was swamped by debt interest payments of 175,000 billion lire.
A planned reduction in the government deficit to 139,000 billion lire this year is unlikely to succeed. Although the budget proposals include cuts in pensions, reduced health expenditure and a public sector hiring freeze, the country's past record of missing targets leads the OECD to conclude that this target will not be met.
With a deficit twice as big as the OECD average, and an inexorably rising ratio of government debt to national output, Italy's governments have come under pressure from the financial markets to sort out their chaotic finances.
Although full of praise for attempts to improve the government finances, the OECD's economists say that further reform will be difficult. The biggest problems are achieving more cuts in the country's generous provision of state pensions, and ballooning interest payments on government debt of nearly 2 million billion lire.
Even so, Italy retains some attractions for international investors. The economy is likely to grow by nearly 3 per cent both this year and next, while inflation should fall from 4 per cent in 1994 to 3.3 per cent this year.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments