Istalia

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Public debt: responsibility and transparency

With the establishment of the National Agency for Management and Amortization of Debt and an upcoming fiscal framework law, the executive aims to ensure stability and sustainability in the long term

Minister of Finance Franco Del Nibbio

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September 5650

ROMULA - Although the Istalian public debt does not cause particular concern today, neither in terms of absolute volume nor in relation to the gross domestic product, the government led by Valeriano Giunio has decided to bring about a change of rigor and responsibility in the management of state finances, laying the foundations for a long-term policy that guarantees stability and sustainability. In light of a positive macroeconomic framework, with solid growth forecasts, the executive intends to adopt a virtuous approach immediately, anticipating possible critical issues and strengthening investor confidence.

In this context, the creation under the authority of the Minister of Finance of the National Agency for Management and Amortization of Debt (Agenzia Nazionale per la Gestione e l'Ammortamento del Debito - ANGAD) was announced, a new state body that will organize the State's indebtedness and manage the public debt, with the primary objective of guaranteeing the liquidity and solvency of the Government at all times and will be responsible for the collection and management of resources intended for the repayment of public debt and the accumulation of funds in the long term, avoiding that these resources are used for current expenditure. The guiding principle of the reform is simple: to clearly and transparently separate the resources used for the ordinary management of the State from those reserved for the scheduled repayment of debt securities, preventing funds intended for the latter from being diverted to cover current expenses.

Furthermore, ANGAD aims to consolidate and strengthen Istalia’s role as a reference issuer in the sovereign bond market, containing interest costs as much as possible in the medium term and limiting the risks associated with interest rate trends. Its functions also include the task of accumulating funds in the long term, strengthening the State's ability to meet its future commitments without financial shocks, and contributing to the stabilization of public needs, as well as providing the Ministry of Finance with market analyses, portfolio management models, monitoring and risk management activities, as well as relations with investors, the press and public opinion regarding government bonds. A choice that, according to Finance Minister Franco Del Nibbio, will send a clear signal to markets and investors, strengthening the perception of Istalia as a country with solid, transparent and responsible governance on the public finance front.

Alongside the establishment of ANGAD, the government has confirmed its intention to adopt a Framework Law on fiscal rules in the coming months, aimed at introducing structural constraints and permanent rules for a prudent and sustainable budget policy in the medium to long term. The law will regulate the definition of public finance objectives, flexibility margins, control and monitoring mechanisms, as well as providing automatic corrective tools in the event of deviation from the established objectives.

In the general framework of rationalization of public spending, already outlined in the recent budget law, the government has also provided for a selective review of tax breaks and non-strategic or low-effectiveness subsidies, with the aim of eliminating waste and recovering resources to be allocated to more productive and innovative sectors. These measures are coherently part of the broader welfare review program, already illustrated in recent days, which aims at greater efficiency and greater integration between the public and private sectors in social spending.

Minister Del Nibbio, questioned by the press, declared:

We are not talking about emergencies or forced recovery maneuvers, but about a far-sighted policy that prepares for the future. Our debt is sustainable but we want it to remain so even in twenty or thirty years.

According to sources close to the government, ANGAD will be operational by the end of the year and the bill on fiscal rules could be presented to Parliament immediately after the summer break. It will be a fundamental step to clearly define the center-right's approach to the economic management of the country: less improvisation, more method, and above all a long-term vision.

The measures announced by the government have not failed to arouse heated criticism, especially from the benches of the parliamentary left. From the New Communist Party, the Green Movement and the most radical wing of the Social Democratic Party, there are no mincing words. Rossella Moscardini, Secretary of the New Communists, thundered in front of journalists:

They disguise austerity as prudence! They cut funds, they disembowel the welfare system, and they hit social spending, while they talk about rigor and responsibility. The executive strengthens the classist vision of the State and wants to rewrite the priorities of public spending based on those who have more.

Similar criticisms also come from Democratic Socialist parliamentarians closer to the trade union movements, who speak of a project that aims to bend economic policy to the needs of the financial markets while ignoring the concrete needs of citizens.
Different, in tone but not in substance, is the line of the PSD leadership, which preferred to focus its response on the interpretation of the past provided by the center-right. These are the words of National Secretary Fabrizio Moccia:

The idea that our governments have navigated by sight or acted improvised is simply unacceptable. We have governed seriously, introducing reforms that have strengthened rights and created tools to improve citizens' lives. We have placed at the center an inclusive welfare system and concrete tools to expand opportunities and reduce inequalities.

Today, all of this is dismissed as "lack of vision": misleading propaganda and an intellectually dishonest distortion. And while they try to rewrite the past with slogans, the same government that accuses us is today pursuing evidently populist and propagandistic measures, as demonstrated by the intervention on public debt.

A measure that comes not by strategic choice, but by necessity: it is, in fact, a patch to contain, hopefully, the surge in debt that is expected in the long term, due to the costs, direct and especially collateral, that will derive from the cuts made to public resources and services. It is the classic "little gift" of today that, as always, will weigh on tomorrow's generations. It is easy to talk about discontinuity, much more difficult to build on solid foundations like the ones we have left!