Risks to Italy's ability to refinance its mountain of debt in the medium to long term are “high,” the EU’s executive arm, the European Commission said in a report.
“The large size of Italy’s public debt makes investors very sensitive to perceived risks,” according to the report.
“The need to roll over sizable amounts of debt, at around 20% of GDP per year, still exposes Italy’s public finances to sudden rises in financial markets’ risk aversion,” the commission said. “High debt-servicing costs also reduce the fiscal space to implement growth-enhancing and countercyclical policies.”
Italy’s debt ratio is close to 140% of GDP, the highest in the euro area after Greece, according to Bloomberg news.
-RW
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