Joint Session of the Fifth Committees of the
Chamber of Deputies (Budget, Treasury and Planning) and of the
Senate of the Republic (Budget)
Preliminary hearing on the
2016 Update of the
Economic and Financial Document
Testimony of the Deputy Director General of the Bank of Italy
Luigi Federico Signorini

Mr President, Honourable Members of Parliament,
I wish to thank the Fifth Committees of the Chamber of Deputies and of the Italian
Senate for inviting the Bank of Italy to give testimony on the 2016 Update of the
Economic and Financial Document. Given the brief time that has elapsed since its
publication, I will focus mainly on the macroeconomic outlook and on developments in
the public finances this year; I will then make some preliminary remarks on the finance
plans and outlook for the next few years.
1. The macroeconomic outlook
The Italian and euro-area economies continue to benefit from today's extremely
accommodative monetary and financial conditions. The outcome of the UK referendum
initially triggered considerable fluctuations on the international markets, which subsequently
eased; a few months on, the effects on the markets have proven limited, in part thanks to the
action of monetary authorities. Uncertainty persists, however, about the longer-term
implications of the UK's decision to rescind its membership of the European Union. World
trade growth has been slower than expected.
In the euro area the recovery is proceeding but at a slower pace than a few months ago.
Consumer price inflation is inching upwards, but core inflation has yet to record the robust
growth required to bring it closer to the inflation objective.
According to the ECB staff macroeconomic projections released on 8 September, euro-area real GDP will
expand by 1.7 per cent this year and by 1.6 per cent in both 2017 and 2018. HICP inflation is projected to
average 0.2 per cent in 2016, and to rise to 1.2 and 1.6 per cent in 2017 and 2018 respectively.
In Italy stuttering economic growth in the second quarter - which had not been foreseen at
the start of the year - reflected stagnant domestic demand. Lower investment in machinery
and equipment was mostly offset by a further increase in that on transport equipment.
Since the start of the recovery in 2014, investment in Italy has been more sluggish both in
comparison to other euro-area countries and relative to what is generally the norm when
countries are pulling out of a recession. Our analyses and findings from business surveys
indicate that investment is still being blocked by weak demand expectations and uncertainty
about future economic trends, geopolitical developments, and the consequences of the UK
referendum.
It is no longer demonstrable that credit availability poses a major obstacle to investment
decisions; business lending is not growing essentially as a result of weak demand. The
differences across categories of firms are significant: trends in loans to firms with more than
20 employees and to those in services are positive, while in the construction sector they
remain negative. Interest rates on new business loans continue to fall and the differential
with respect to the corresponding euro-area average has been all but wiped out.
In the three months ending in August, lending to the non-financial private sector stagnated on a seasonally
adjusted basis, while household lending continues to expand (1.4 per cent on an annualized basis); loans to
non-financial corporations contracted by 1.2 per cent. For new loans to firms the cost of borrowing has come
down by around 25 basis points from the end of 2015.
Signs from the labour market are positive overall. In 2015, thanks in part to the social
security contribution relief for open-ended hiring and the introduction of contracts with
rising levels of protection, employment grew more rapidly than trends in output might have
suggested. In 2016 employment continued to expand; during the year there have been signs
of a slowdown, possibly also in connection with the retrenchment of social security
contribution relief.
Following the hiatus of the second quarter, GDP - on the basis of the information provided
by the cyclical indicators - could start to increase again in the third, albeit at a very slow pace.
In July industrial output rose by 0.4 per cent, returning to the average levels recorded in the second quarter. In
September business confidence was bolstered across all sectors of economic activity, also thanks to the more
favorable assessments on order books. Household confidence is still relatively robust, but below the levels
recorded at the end of 2015. According to September's Survey on Inflation and Growth Expectations, firms
expect to increase investment expenditure overall in the second half of 2016.
The macroeconomic outlook in the Update of the Economic and Financial Document is less
favourable compared to that of April. According to the current legislation scenario, GDP in
Italy will increase by 0.8 per cent this year (as against 1.2 per cent forecast in the spring) and
slow slightly in the next (to 0.6 per cent, compared with 1.2 per cent). The downward
revision reflects the deterioration of the international context and, in particular, the further
weakening of world trade and the rise in oil prices, whose effects on exports and production
activities in Italy appear to have been compounded by the appreciation of the exchange rate.
The rate of inflation, obtained using the consumption deflator, is expected to reach 0.1 per
cent and to rise to 1.7 per cent in 2017.
The current legislation scenario for the two years 2016-17 is largely in line with the estimates
available today. Among the recent assessments by leading private and institutional
forecasters, the Government's estimate for growth in 2017 is at the lower end of the scale;
however, generally speaking the other forecasts discount the negative effects of the increase
in indirect taxes envisaged under the EU's 'safeguard clauses', which instead are taken into
account in the Government's unchanged legislation scenario.
Following the publication in August of the GDP data in the second quarter, the main forecasters revised their
growth forecasts significantly downward for 2017 as well. According to both the OECD's Interim Economic
Outlook released in September and the average assessments of the analysts polled by Consensus Economics in
the same month, output will grow by 0.8 per cent in Italy both this year and the next. A less favourable
outlook was depicted last 15 September by Confindustria's Centre for Studies, which estimated an increase of
0.7 per cent this year, slowing to 0.5 per cent in 2017.
Compared with the current legislation scenario, the Government's policy scenario predicts
sharply higher growth for next year (0.4 points) and lower inflation (0.8 points). The
difference is owing to the cancellation of the VAT hike envisaged under the safeguard
clauses coupled with other interventions the Government intends to make in its next budget
law. These include public investment in infrastructure, tax incentives for firms that invest,
and income support for pensioners.
Overall, compared to the current legislation scenario the measures planned for 2017 entail an
increase in net borrowing amounting to almost half a percentage point of GDP, and a
comparable rise in output. The implicit multiplier in this forecast is high, also in view of the
normally lagged response of private expenditure to budgetary measures. The Government
estimates that the absence of any VAT increase will contribute 0.3 percentage points to GDP
growth in 2017, a rather strong effect when compared to the econometric estimates based on
past data. The other expansionary measures are expected to provide a further contribution of
0.3 percentage points. Since much depends on what intervention is taken and how it is
implemented, to make any comprehensive assessment it will be necessary to await further
details; the priority assigned to forms of investment support is certainly a welcome
development.
The Government has requested authorization from Parliament to increase the deficit from
that indicated in the new policy scenario, by up to 0.4 percentage points of output, in order
to finance greater spending necessitated by exceptional events, in particular to secure Italy's
territory and buildings and to manage migration flows. The current policy scenario does not
take account of the effects on output of these eventual extra expenses.
For the subsequent two years (2018-19), the GDP growth forecasts in the current legislation
scenario are unchanged with respect to April's estimates (1.2 per cent in 2018 and 1.3 per
cent in 2019); the policy scenario, by contrast, has revised them downwards, by 0.2
percentage points a year. This change likely reflects the nature of the planned interventions
and, in particular, the remodelling of the expected increases in indirect taxes.
2. The public finances in 2016
Compared to April's Economic and Financial Document, the Update slightly modifies the
estimates for this year. Net borrowing is expected to reach 2.4 per cent of GDP, one
tenth of a point more than in the April forecast. The variation is mostly ascribable to
lower growth expectations; running counter to this was the downward revision of capital
expenditure and the upward revision of direct taxes. Although the new estimate is less
favourable, the deficit is nonetheless expected to contract compared with 2015 (from 2.6
to 2.4 per cent of GDP).
Available data on the cash balance and revenues are compatible with the Government's
estimates for net borrowing. At least in the first seven months of 2016 (compared with
the year-earlier period and taking account of the effects of the main operations that have
no impact on net borrowing and of a number of temporal asymmetries), it can be
estimated that the general government borrowing requirement has improved by slightly
more than what would be consistent with the Government's estimates of net borrowing
for this year.
The Government's forecasts of greater direct tax revenues in 2016 are in line with the
trends observed so far in revenues for the State budget. In the first eight months of the
year, net of lotteries and other gaming receipts, these grew by 4.0 per cent compared
with the corresponding period of 2015, driven in particular by the solid performance of
self-assessment tax returns.
In the Update's estimates, primary expenditure is forecast to remain basically stable,
compared to growth of 1.8 per cent in nominal output. The ratio of taxes and social
security contributions to GDP is expected to fall by 0.7 points of GDP.
The structural deficit, net of the effects of the business cycle and temporary measures, is
forecast instead to increase by half a percentage point of GDP compared to 2015,
reaching 1.2 per cent in the policy scenario.
In the policy scenario for 2016, the explanation for why net borrowing as a share of GDP falls but the structural
deficit increases, can be found in the improved cyclical situation compared with 2015. The contraction of around 1
percentage point in the output gap (measured according to the EU methodology with a time horizon of four years
underpinning the macroeconomic forecast) reduced the negative cyclical component of the deficit by more than half a
percentage point of GDP; on the other hand, the cyclically-adjusted primary surplus, reflecting the expansionary
stance of budgetary policy in 2016, contracted by a similar amount. The further diminution in interest payments
(0.2 percentage points) enabled net borrowing to fall this year as well.
The deterioration is greater than that indicated in the EU Council's Recommendations of
last July, taking into account the margins of flexibility recognized mainly for structural
reforms and investment. In the Government's assessment, the deviation is 'not
significant' and should accordingly not endanger compliance in 2016 with the preventive
arm of the Stability and Growth Pact.
According to EU fiscal rules, in 2016 Italy should have cut its structural deficit by 0.5 percentage points of output,
but in July the Council granted its request for flexibility in order to make structural reforms and public investments,
totalling 0.75 percentage points of output. The structural deficit can accordingly expand by 0.25 percentage points.
To this could be added a further degree of flexibility amounting to 0.1 points in connection with expenditure in
response to exceptional events in particular the migration crisis and security, bringing the total deterioration
permitted to 0.35 points; the relative assessment, however, will not be made by the Commission until the spring of
2017 on the basis of final outturns.
Greater flexibility has been granted on condition that, when the next Draft Budgetary
Plan is assessed, the Commission shall verify the fulfilment of the pledge the Government
made in the spring to resume the adjustment towards the medium-term objective (budget
balance in structural terms).
According to April's Economic and Financial Document, in 2016 debt as a share of
output would begin to decline, albeit only slightly (by 0.3 percentage points). In the
updated estimates the inversion in the trend has been postponed until next year. In 2016
the ratio of debt to GDP is expected to grow by 0.5 percentage points, reaching 132.8 per
cent.
Half of the revised estimate (0.4 percentage points) is ascribable to the effect of the
reduction in the growth forecasts for GDP, which lowers the denominator of the ratio.
The remainder is mostly owing to privatization receipts that were lower than those
planned last year and confirmed in April's Economic and Financial Document (0.1 per
cent of GDP against 0.5 per cent). In part owing to unfavourable market conditions, in
recent years the number of privatizations actually carried out has always been lower than
that originally envisaged.
Following the recent revisions to GDP and to the nominal value of debt, the ratio of debt to GDP in 2015 came to
132.3 per cent of GDP, 0.4 percentage points less than the figure published in the spring document.
3. Public finance projections and plans for 2017-19
I will now comment on the outlook for the public finances in the next few years,
analysing, as is customary, first the projections on a current legislation basis (baseline
estimates) and then the plans that take account of the measures the Government intends
to put into effect in the next budget law.
Current legislation projections. - Net borrowing is forecast to decrease gradually in the three
years 2017-19; at the end of the planning horizon it is expected that the nominal budget
balance will have been reached. Compared with the forecasts made in the 2016 Economic
and Financial Document, the estimates in the Update have been revised upwards by 0.2
percentage points of GDP in 2017 (to 1.6 per cent) and by around 0.4 percentage points
on average for the two years 2018-19. These revisions mainly reflect the slowdown in
GDP growth, partially offset by a reduction in interest payments (of about 0.1 percentage
points of GDP on average over the three years).
The primary surplus as a percentage of GDP is expected to increase from 1.5 per cent this year to 2.1 per
cent in 2017, reaching 3.4 per cent at the end of the forecasting horizon, representing a downward revision
of about 0.4 percentage points per year on average compared with last April's estimates. Structural net
borrowing is expected to diminish by 0.6 points in 2017 and to continue to decline in the following two
years, reaching 0.2 per cent of GDP in 2019 (against a surplus of 0.1 percentage points as estimated in
April's Economic and Financial Document).
In the current legislation scenario, general government debt will begin to diminish next
year; in the following two years the decline will be more pronounced; at the end of the
forecasting horizon public debt will reach 126.1 per cent of GDP. The fall in the debt to
GDP ratio in the three years 2017-19 is now expected to be two percentage points
smaller than in April's Economic and Financial Document, which forecast that the
reduction would have already begun this year.
Plans and measures. - The fiscal stance, measured by the change in the cyclically-adjusted
primary surplus, is basically unchanged from that planned in April; also in this instance
the changes in the objectives are therefore mostly ascribable to the worsening of the
economic situation since April. Fiscal policy is expected to remain expansionary in 2017
and become slightly more restrictive in the following two years.
The cyclically-adjusted primary surplus is expected to decline from 2.9 per cent of GDP in 2016 to 2.6
per cent in 2017; in the following two years it should increase steadily, reaching 3.2 per cent of GDP in
2019.
Planned net borrowing in 2017 amounts to 2.0 per cent of GDP (against 1.6 per cent in
the current legislation scenario). The structural balance is unchanged from the
previous year. April's Economic and Financial Document fixed an objective of 1.8 per
cent for net borrowing in 2017 and an improvement in the structural balance of 0.1
percentage points.
Given the current economic situation the Government believes it would be
counterproductive to make a structural adjustment in 2017.
In April's Economic and Financial Document the estimated output gap for 2017 was negative, at a little
more than 1 per cent of potential output; in 2018 the output gap was projected to be zero, turning positive
in 2019 (0.7 percentage points). However, the Update - which continues to utilize the European
Commission's methodology - estimates an output gap of -1.7 per cent for 2017, which will be reduced in
2018 and amount to nil in 2019.
As already announced in the last Economic and Financial Document, in 2017 the
Government intends to avoid the indirect tax increases provided for by the 2015 Stability
Law and to only partly offset the effects of this decision with measures to counter tax
evasion and elusion together with others to reduce spending. A thorough analysis of the
effectiveness of the anti-tax evasion measures taken in the past (for example 'split
payments' or 'reverse charges') would enable prevention and counter measures to be
oriented towards the instruments that have actually proved most effective in practice.
The safeguard clauses provide for an increase in the VAT rate (and in the excise duties on mineral oils
starting in 2018) to ensure higher revenues of €15.1 billion in 2017 and €19.6 billion starting in the
following year. The Government has also announced further measures for 2017, mainly in the field of
social security and support for public and private investment; these will be detailed in the draft budget law
due to be presented to Parliament by 20 October.
The Update gives no specific indications as to the main areas of intervention of the fiscal policy measures
for the next three years or the expected financial effects in terms of revenue and expenditure.
As I mentioned in reference to the macroeconomic scenario, the Government is also
asking Parliament for authorization to increase, if necessary, net borrowing by up to a
maximum of 0.4 percentage points of GDP in 2017 (€7.7 billion). The request specifies
that any increase in the deficit would reflect spending necessitated by exceptional events,
in particular to secure Italy's territory and buildings and to manage migration flows. The
policy scenario does not take account of the effects of these potential outlays.
Net borrowing is forecast to fall to 1.2 per cent of GDP in 2018 and to 0.2 per cent in
2019. In terms of the structural deficit, the adjustment would begin again in 2018 and a
broadly balanced budget (the medium-term objective for Italy) would be achieved in 2019,
as already forecast in April's Economic and Financial Document.
The debt to GDP ratio should begin to fall in 2017; at the end of the forecasting horizon
(2019) the reduction would be about half a percentage point lower than that indicated in
the current legislation scenario. One contribution to this reduction is expected to come
from privatizations, whose objectives for the three years 2017-19 are the same as in
April's Economic and Financial Document (0.5 per cent of GDP in each of the two years
2017-18 and 0.3 per cent in 2019). Over the three years, the debt to GDP ratio is
expected to decline at a slower pace than planned in the spring (by 6.2 instead of 8.6
percentage points), mainly owing to the smaller-than-expected growth in nominal GDP.
As indicated in the Update and in April's Economic and Financial Document, the
numerical criterion of the debt rule will not be met either this year or the next. In April,
the distance from the benchmark provided for in the debt rule was shorter; on that
occasion, the Government had explicitly recalled the relevant factors - such as low
inflation - which suggested that there would be no violation of the rule, despite the failure
to reach the benchmark.
The Government considers that the objectives in the Update are consistent with EU
rules, also in view of the deterioration of cyclical conditions and the revised estimate of
the output gap. The European Commission will issue its opinion on this in November,
when it assesses the Draft Budgetary Plan.
In May the Commission assessed Italy's Stability Programme, signalling the risk of a significant deviation
from the objectives set by European rules and calling for a larger structural adjustment in 2017 in respect
of what had been planned. The flexibility margins granted by the Commission in 2016 (0.85 percentage
points of GDP) were conditional on the resumption of consolidation in 2017.
4. Conclusions
Mr President, Honourable Members of Parliament,
Before drawing to a close, I will summarize the main points I wished to bring to your
attention and make some concluding remarks.
The current legislation macroeconomic scenario for the two years 2016-17 prudently takes
account of the worsening of the external situation; on the basis of the information
available, the scenario as outlined accordingly appears tenable.
The available data on the general government cash balance are consistent with the
Government's estimate of the deficit for 2016.
The policy scenario for 2017 projects that GDP growth will be significantly stronger than
in the baseline scenario. The objective is an ambitious one. The forecast is based on a mix
of budgetary provisions about which the Update does not go into detail. To achieve the
desired results, the next budget law will have to be drawn up with great care.
Turning to the measures to support growth, it would be a good idea to focus attention on
those that could encourage a rapid recovery of both private and public investment. For
the latter, in particular, not only must resources be allocated but safeguards also put in
place to ensure their efficient and prompt utilization. The recessionary effects of the
necessary funding could be limited by pinpointing any waste that can be eliminated and by
keeping down general government running costs.
If the outturn data confirm the forecasts, the ratio of current primary expenditure to
GDP will decline slightly in 2016 as well, continuing the trend of the last two years (data
adjusted for the tax credits for employees with medium-low incomes). I believe that the
reduction in primary spending is an important result; indeed it is essential that this
objective be pursued with increasing determination, if the public finances are to be kept
under control without having to rely solely on today's exceptionally low interest rates and
without squeezing investment, whose recovery is essential for growth. The more the
efforts made to limit outlays in recent years are systematic and built into an in-depth
spending review, the greater, more robust and longer-lasting the results will be.
The Italian economy is benefiting from the euro-area's exceptionally expansionary
monetary policy. This is no reason not to act, quite the contrary: other economic policies
can and must exploit the space this creates. Lower interest payments allow us to begin to
reduce the public debt without slowing the economy - essential for a country like Italy,
which has such a large accumulated public debt. Cyclical stimulus enables the short-term
costs of structural reforms to be lowered, creating the conditions to accelerate their
implementation and making it easier to revive and complete them.
Reducing Italy's debt burden remains a strategic objective. Undoubtedly one of the
reasons that this did not start to happen this year was the poor performance of GDP and
the difficulties in concluding, in adverse market conditions, the privatizations originally
envisaged. Certainly, market conditions are important in deciding which privatizations to
carry out and when. If, on the one hand, it is better to make cautious predictions about
how much can actually be privatized year by year, on the other, by making clear,
ambitious strategic choices, it will be possible to act swiftly and for significant amounts
when market conditions so permit. An appropriate privatization strategy should more
than help to reduce the debt: flanked by the proper rules and controls, it must also aim to
raise efficiency.

TABLES AND FIGURES

Table 1
Macroeconomic Outlook in
the 2016 Economic and Financial Document (EFD) and
in the Update to the 2016 Economic and Financial Document
(percentage changes)
2016 EFD Update to the 2016 EFD
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
CURRENT LEGISLATION SCENARIO
Real GDP 0.8 1.2 1.2 1.2 1.3 0.7 0.8 0.6 1.2 1.3
Imports 6.0 2.5 3.2 4.3 4.0 6.0 2.3 2.2 3.2 3.8
Consumption by
households and
nonprofit institutions 0.9 1.4 1.0 1.3 1.4 1.5 1.2 0.4 1.0 1.2
General government
expenditure -0.7 0.4 -0.1 -0.4 0.8 -0.6 0.4 0.0 -0.3 0.2
Investments 0.8 2.2 2.5 2.8 2.5 1.3 1.9 1.5 2.6 2.8
Exports 4.3 1.6 3.8 3.7 3.5 4.3 1.3 2.5 3.3 3.5
Nominal GDP 1.5 2.2 2.6 2.9 3.0 1.4 1.8 1.8 2.9 3.0
Consumption deflator 0.1 0.2 1.8 1.8 1.8 0.0 0.1 1.7 1.7 1.6
Employment (full-time
equivalents) 0.8 0.8 0.7 0.7 0.6 0.8 0.9 0.4 0.6 0.8
POLICY SCENARIO
Real GDP 0.8 1.2 1.4 1.5 1.4 0.7 0.8 1.0 1.3 1.2
Imports 6.0 2.5 3.8 4.6 4.2 6.0 2.3 3.3 3.4 4.0
Consumption by
households and
nonprofit institutions 0.9 1.4 1.4 1.7 1.6 1.5 1.2 1.0 0.9 0.9
General government
expenditure -0.7 0.4 -0.3 -0.5 0.8 -0.6 0.4 0.5 -0.4 0.3
Investments 0.8 2.2 3.0 3.2 2.4 1.3 1.9 3.2 3.6 3.8
Exports 4.3 1.6 3.8 3.7 3.4 4.3 1.3 2.5 3.3 3.3
Nominal GDP 1.5 2.2 2.5 3.1 3.2 1.4 1.8 1.9 3.0 3.1
Consumption deflator 0.1 0.2 1.3 1.6 2.0 0.0 0.1 0.9 1.9 2.2
Employment (full-time
equivalents) 0.8 0.8 0.8 0.9 0.7 0.8 0.9 0.6 0.8 0.8
Table 2
Main public finance indicators for general government (1)
(per cent of GDP)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
44.0 45.3 45.1 45.9 45.6 45.7 47.8 48.1 47.9 47.8
Revenue
Expenditure (2) 47.6 46.8 47.8 51.2 49.9 49.4 50.8 50.8 50.9 50.4
of which: interest
4.4 4.8 4.9 4.4 4.3 4.7 5.2 4.8 4.6 4.2
payments
0.9 3.2 2.2 -0.9 0.0 1.0 2.3 2.1 1.6 1.5
Primary surplus (3)
Net borrowing 3.6 1.5 2.7 5.3 4.2 3.7 2.9 2.7 3.0 2.6
Total borrowing
3.8 1.7 3.1 5.5 4.3 3.9 4.1 4.8 4.1 3.1
requirement
Borrowing requirement net
3.8 1.9 3.1 5.6 4.3 4.0 4.6 4.9 4.3 3.5
of privatization receipts
Debt 102.6 99.8 102.4 112.5 115.4 116.5 123.3 129.0 131.9 132.3
Debt net of the financial
support given to EMU 102.6 99.8 102.4 112.5 115.1 115.7 120.7 125.5 128.2 128.7
countries (4)
Source: Based on Istat data for the general government consolidated accounts items.
(1) Rounding of decimal points may cause discrepancies in totals. ─ (2) The proceeds of sales of public assets are
recorded as a deduction from this item. ─ (3) A negative value corresponds to a deficit. ─ (4) Excludes liabilities related
to capital contributions to the European Stability Mechanism (ESM) and loans to EMU member countries, disbursed both
bilaterally and via the European Financial Stability Facility (EFSF).
Table 3
General government revenue (1)
(per cent of GDP)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Direct taxes 13.8 14.5 14.7 14.1 14.1 13.9 14.9 15.0 14.7 14.8
Indirect taxes 14.5 14.4 13.6 13.4 14.0 14.1 15.3 14.9 15.4 15.2
Capital taxes 0.0 0.0 0.0 0.8 0.2 0.4 0.1 0.3 0.1 0.1
Tax revenue 28.3 28.9 28.3 28.4 28.3 28.4 30.3 30.2 30.1 30.1
Social security
contributions 11.9 12.6 13.0 13.5 13.3 13.2 13.4 13.4 13.2 13.3
Tax revenue and social
security contributions 40.2 41.5 41.3 41.8 41.6 41.6 43.6 43.6 43.4 43.4
Production for market and
for own use 1.8 1.8 1.9 2.0 2.0 2.0 2.1 2.3 2.3 2.3
Other current revenue 1.7 1.7 1.7 1.8 1.9 1.8 1.8 1.9 2.0 1.9
Other capital revenue 0.3 0.3 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.3
Total revenue 44.0 45.3 45.1 45.9 45.6 45.7 47.8 48.1 47.9 47.8
Table 4
General government expenditure (1)
(per cent of GDP)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Compensation of employees 10.6 10.2 10.4 10.9 10.8 10.4 10.3 10.3 10.1 9.8
Intermediate consumption 4.9 4.9 5.1 5.4 5.4 5.3 5.4 5.6 5.5 5.4
Social benefits in kind 2.7 2.6 2.7 2.9 2.9 2.7 2.7 2.7 2.7 2.7
Social benefits in cash 16.3 16.4 17.0 18.5 18.6 18.6 19.3 19.9 20.2 20.3
Interest payments 4.4 4.8 4.9 4.4 4.3 4.7 5.2 4.8 4.6 4.2
Other current expenditure 3.3 3.4 3.4 3.7 3.7 3.7 3.9 4.1 4.2 3.9
Total current expenditure 42.2 42.3 43.5 46.0 45.7 45.4 46.8 47.4 47.2 46.3
of which: expenditure net of
interest payments 37.7 37.5 38.5 41.5 41.4 40.7 41.6 42.6 42.6 42.1
Gross fixed investments 2.9 2.9 3.0 3.4 2.9 2.8 2.6 2.4 2.3 2.2
Other capital expenditure 2.5 1.6 1.4 1.8 1.2 1.2 1.4 1.0 1.4 1.9
Total capital expenditure 5.5 4.5 4.4 5.2 4.2 4.0 4.0 3.4 3.7 4.1
Total expenditure 47.6 46.8 47.8 51.2 49.9 49.4 50.8 50.8 50.9 50.4
of which: expenditure net of
interest payments 43.2 42.0 42.9 46.7 45.6 44.7 45.6 46.0 46.3 46.2
Source: Based on Istat data.
(1) Rounding of decimal points may cause discrepancies in totals.
Table 5
General government borrowing requirement
(billions of euros)
Year First 7 months
2013 2014 2015 2014 2015 2016
Borrowing requirement net of privatization
receipts (a) 78.9 69.9 57.6 36.8 21.4 22.6
Privatization receipts (b) 1.9 3.3 6.6 3.3 3.3 0.8
Total borrowing requirement (c=a-b=d+e+f+g+h+i) 77.0 66.5 51.0 33.5 18.1 21.8
FINANCING
Currency and deposits (1) (d) -1.8 14.7 5.1 5.9 0.3 -5.4
of which: Post Office deposits -2.2 -1.1 -1.5 -0.5 -1.5 -0.6
Short-term securities (e) -11.0 -16.0 -9.5 0.3 3.5 2.3
Medium- and long-term securities (f) 91.7 82.0 44.2 104.1 65.3 90.3
Loans from MFIs (g) -3.6 -4.3 1.7 -2.9 1.8 0.8
Other liabilities (2) (h) 4.9 -1.2 -1.1 -1.8 -3.0 -0.9
of which: loans via the EFSF 7.2 1.8 -2.1 1.6 -2.1 0.0
Change in the Treasury's liquidity balance (3) (i) -3.2 -8.8 10.7 -72.1 -49.8 -65.3
Table 6
Public finance objectives and estimates for 2016
(per cent of GDP)
General government Memorandum item:
Net borrowing Structural net Primary Debt GDP growth Debt 2015
borrowing surplus rate
Objectives
April 2015 (1) 1.8 0.4 2.4 130.9 1.4 132.5
Autumn 2015 (2) 2.4 .... 1.8 131.4 1.6 132.8
April 2016 (3) 2.3 1.2 1.7 132.4 1.2 132.7
September 2016 (4) 2.4 1.2 1.5 132.8 0.8 132.3
Estimates
April 2016 (3) 2.3 1.3 1.7 132.4 1.2 132.7
September 2016 (4) 2.4 1.4 1.5 132.8 0.8 132.3
(1) Economic and Financial Document 2015. - (2) Net borrowing and primary surplus based on data in the Technical Note to
the 2016 Stability Law; debt based on data in the 2016 Draft Budgetary Plan. - (3) 2016 Economic and Financial Document
- (4) 2016 Update to the Economic and Financial Document.
Table 7
Policy scenario in the 2016 Economic and Financial Document and in the Update to the 2016
Economic and Financial Document (1)
(per cent of GDP)
2016 EFD Update to the 2016 EFD
2015 2016 2017 2018 2019 2015 2016 2017 2018 2019
Net borrowing 2.6 2.3 1.8 0.9 -0.1 2.6 2.4 2.0 1.2 0.2
Primary surplus 1.6 1.7 2.0 2.7 3.6 1.5 1.5 1.7 2.4 3.2
Interest payments 4.2 4.0 3.8 3.6 3.5 4.2 4.0 3.7 3.6 3.4
GDP growth rate 0.8 1.2 1.4 1.5 1.4 0.7 0.8 1.0 1.3 1.2
Debt (2) 132.7 132.4 130.9 128.0 123.8 132.3 132.8 132.5 130.1 126.6
(1) Rounding of decimal points may cause discrepancies in totals. - (2) Gross of financial support given to EMU
countries.
Table 8
Privatization receipts: objectives and outturns (1)
(per cent of GDP)
2013 2014 2015 2016 2017 2018 2019
Objectives
2013 EFD (April 2013) 1.0 1.0 1.0 1.0 1.0
Update to the 2013 EFD (September 2013) 0.5 0.5 0.5 0.5
2014 EFD (April 2014) 0.7 0.7 0.7 0.7
Update to the 2014 EFD (September 2014) 0.3 0.7 0.7 0.7 0.7
2015 EFD (April 2015) 0.4 0.5 0.5 0.3
Update to the 2015 EFD (September 2015) 0.4 0.5 0.5 0.5
2016 EFD (April 2016) 0.5 0.5 0.5 0.3
Update to the 2016 EFD (September 2016) 0.1 0.5 0.5 0.3
Ou