[ad_1]
The first rating agency drew the consequences of the Italian government's fiscal policy. Moody's downgraded the country in debt on Friday night. Long-term debt is now rated "Baa3" after "Baa2," said Moody's. Thus, the credit rating is only one step above the notorious junk status.
Many investors have recently withdrawn money from Italy because the new government of the five-star populist movement and the right Lega plans a new debt three times larger for 2019 compared to its predecessor. Large funds are often not allowed to place money in government bonds if they are clbadified as junks.
It is not so far. Moody's rating outlook is now "stable". Italy is therefore not threatening further decommissioning. But the rating agency Fitch has a "negative" outlook. This implies a potentially worse rating. The third major rating agency, S & P, wants to review its rating at the end of the month. Here, however, the outlook is "stable".
Italy has met its draft budget to strongly criticize the European Commission. The latter has just informed the Rome government by letter that the draft budget constitutes a particularly serious violation of the EU rules. The Commission has set Monday the deadline for response.
No "coherent reform agenda"
Moody's badysts have said that the change in fiscal policy should lead to a mountain of debt in the coming years is not expected to decline, but above about 130% relative to economic performance. In reality, the EU has an upper limit of 60%. The high level of debt makes Italy vulnerable, according to Moody's. The agency criticized the government's plans in Rome not to adopt a "coherent reform agenda" that would change the country's growth below average.
The new government wants to invest more to give more impetus to the third economy of the euro area. Tax cuts and a kind of basic security are among other things envisaged. "Most increases in public spending are structural, which means that they are hard to reverse," Moody said. Plans can push the economy, but not as much as the government hoped.
Source link