Italy forecasts debt below 140% of GDP despite surging home renovation expenditure

Debt control confidence: Italy anticipates keeping its debt below 140 per cent of gross domestic product (GDP) this year despite higher spending on home revation incentives, according to a statement by Ecomy Ministry undersecretary Federico Freni. 

Freni revealed at a business conference organised by European House Ambrosetti think-tank that expenditure on incentive schemes for building revations or energy efficiency enhancements would exceed 210 billion euros ($228 billion).

"We don't have precise number yet, but we are definitely above 210 billion euros ... that's how much we've spent on building incentive schemes," he stated. Freni emphasised necessity to meticulously plan and monitor public spending due to inability to disregard debt burden.

Forecast adjustment necessary

Given higher-than-forecast cost of incentives, Italy may need to revise its 2023 deficit and debt figures, currently standing at 7.2 per cent and 137.3 per cent of GDP, respectively.

Responding to enquiries about possibility of debt-to-GDP ratio surpassing 140 per cent this year, Freni firmly denied it.

Italy's cabinet is scheduled to convene on April 9 to approve Ecomic and Financial Document (DEF) containing latest forecasts.

GDP growth revision

Earlier this week, sources indicated that Treasury would project GDP growth of 1 per cent in 2024, down from previous estimate of 1.2 per cent set in September. This adjustment aligns with Bank of Italy's forecast of 0.8 per cent growth, made on Friday.

latest growth forecast exceeds European Union's current projection of 0.7 per cent, a figure that Ecomic Commissioner Paolo Gentiloni mentioned would likely be confirmed in June when Commission publishes updated projections.

(With Reuters Inputs)