Fitch revises Italy view to negative

Fitch Ratings said it revised Italy's outlook to negative from stable and affirmed the long-term foreign and local currency issuer default ratings at BBB+.

The issue ratings on Italy's senior unsecured foreign- and local-currency bonds were also affirmed at BBB+. The country ceiling was affirmed at AA+ and the short-term foreign-and local currency issuer default ratings at F2. The issue ratings on Italy's short-term foreign currency commercial paper and short-term local currency bonds were also affirmed at F2.

Fitch said the draft 2017 budget sets out a revised target for the general government budget deficit of 2.3% of GDP, up from 1.8% in April 2016's stability program (SP) and 0.8% in the 2015 SP. The deficit target for 2018 was also revised up to 1.2% from 0.9% in the 2016 SP and the 2019 target to a deficit of 0.2%, from a surplus of 0.1%.

This reflects the intended de-activation of Italy's 'safeguard clause' involving automatic VAT increases for 2017 and represents a continued pattern of slippage against fiscal targets since 2013, the agency added.

In Fitch's view, the track record of repeated delay and back-loading of fiscal consolidation reduces credibility. It forecasts somewhat larger budget deficits at 2.4% of GDP in 2017 and 1.7% in 2018.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.