ROME — Italy’s public debt has escalated to a new high, approaching 3,000 billion euros as reported by the central bank on Friday. The debt stood at 2,948.5 billion euros in June, marking an increase of 30.3 billion euros from the previous month.
According to Burkina Information Agency, this increase is attributed to several factors including the needs of public administrations, which added 15.3 billion euros to the debt, and a rise in liquid Treasury funds by 13.5 billion euros. Other contributing factors cited were spreads and issue premiums and reimbursements, the revaluation of securities indexed to inflation, and fluctuations in exchange rates, accounting for an additional 1.4 billion euros. The debt has surged by over 180 billion euros since Prime Minister Giorgia Meloni, representing the far-right, assumed office.
Despite the mounting debt, Italy shows a mix of economic indicators. Unemployment rates are decreasing and the employment rate is on the rise, with real wages also increasing—though they still remain below their 2007 levels, a nearly unique situation among OECD countries. Additionally, inflation in Italy is currently lower than the average price rise in the euro zone, with the Bank of Italy forecasting a 1.1% increase this year.
However, economic growth in Italy remains modest at 0.2% in the second quarter, prompting the government to adjust its growth forecasts to 1% for this year and project a gradual increase to 1.2% in 2025 and 1.1% in 2026. These conditions leave the Italian government with limited fiscal space as the state debt continues to grow.
In response to these fiscal challenges, the European Union initiated a procedure for excessive public deficit against Italy and six other member states including France, Belgium, Hungary, Poland, Slovakia, and Malta at the end of July. These countries had exceeded the public deficit limit of 3% of GDP set by the Stability Pact, which also caps debt at 60% of GDP. Italy, having the highest deficit at 7.4% of GDP last year and a debt ratio of 137% of GDP, faces significant scrutiny.
The countries targeted by this disciplinary action are required to submit medium-term plans by September detailing their strategies to realign with EU fiscal norms. The European Commission will assess these plans in November and outline necessary steps to ensure fiscal recovery.
