Italy: Toward a Growth-Friendly Fiscal Reform
By Michal Andrle (International Monetary Fund (IMF)), Shafik Hebous (International Monetary Fund), Alvar Kangur (International Monetary Fund (IMF)), Mehdi Raissi (International Monetary Fund (IMF) – Asia and Pacific Department)
Published in late 2017, the Italian medium-term fiscal plan aims to achieve structural balanceby 2020, although concrete, high-quality measures to meet the target are yet to be specified.This paper seeks to contribute to the discussion by:
(i) assessing spending patterns to identifyareas for savings
(ii) evaluating the pension system
(iii) analyzing the scope for revenuerebalancing
(iv) And putting forward a package of spending cuts and tax rebalancing that isgrowth friendly and inclusive
Could have limited near-term output costs, and would achievea notable reduction in public debt over the medium term. Such a package could help theauthorities balance the need to bring down public debt and, thus, reduce vulnerabilities whilesupporting the economic recovery.