IMF Urges Italy to Maintain Fiscal Discipline to Tackle National Debt

Italy: Italy needs to keep up the good work on the fiscal front to be able to start bringing down its huge national debt of over three trillion euros, the IMF said on Thursday following its Article IV mission here.

According to Ansa News Agency, “A better-than-expected fiscal outturn in 2024, owing to continued improvements in tax compliance and a strong labor market, is welcome,” the IMF stated. The international financial institution acknowledged Italy’s efforts in reducing its fiscal deficit and achieving a primary surplus, with authorities planning further gradual deficit reduction.

“Overall, the headline deficit was halved, the primary balance turned to a surplus, and the authorities envision further gradual deficit reduction,” the IMF noted. The staff of the IMF recommends maintaining this strong fiscal performance, aiming for a primary surplus of 3 percent of GDP by 2027 to significantly lower the debt ratio and mitigate related vulnerabilities.

“Achieving this goal would require additional near-term efforts compared to what is already built into the authorities’ fiscal plans,” the IMF emphasized, suggesting that Italy will need to intensify its efforts to meet these fiscal targets.