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The country thus goes from "Baa2" to "Baa3", meaning that it is downgraded to the last step of this category which precedes the speculative category.
The rating agency Moody's announced Friday, October 19 to have degraded the rating of Italy. She explained that she was worried about a stabilization and not a decrease in the public debt over the next few years, a deterioration announced when Brussels asked for "Clarifications" on the country's 2019 budget.
Read also the editorial of the World:
The return of the "Italy risk"
The rating changes from "Baa2" to "Baa3", meaning that the country is downgraded to the last step of this category that precedes the speculative category. Moody's has, however, matched this decision with a stable outlook, meaning it should not degrade this new rating in the next six months.
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"Budget largesse will not solve the fundamental problems of Italy"
130% of GDP
"Italy's debt ratio is likely to stabilize around the current rate of 130% of GDP in the coming years, rather than start to decline as Moody's thought it would" previously, argued the agency, which believes that the public debt is all the more problematic as the prospects for economic growth are lower.
"The government's plans for fiscal and economic measures are not a coherent agenda of reforms that can address the problems of disappointing growth. "
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Italian populists develop a 2019 expansionary budget
Moody's adds that in the short term too, "The fiscal stimulus will bring a more limited growth momentum than the government estimates".
"Unprecedented skidding"
The Italian draft budget for 2019 provides for a deficit of 2.4% of gross domestic product, far from the 0.8% promised by the previous center-left transalpine executive.
The Italian skid is "Unprecedented in the history of the Stability and Growth Pact", wrote the European Commission in a letter asking Rome to submit its comments before "Monday, October 22 at noon".
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On the Italian budget, Brussels determined to hold a hard line
Brussels is at risk of "Serious non-conformity" with the European rules, which could lead him to reject this budget. Such a decision has never occurred in the history of the European Union.
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