Italy’s public debt not a concern, but Rome is still considering guarantees for defense

Brussels – Public accounts are not exactly the best — Italy’s public debt is second only to that of Greece –but the situation is not a cause for concern. At least, that’s what insiders and observers say. Of course, European sources point out that “the precise reason we have rules is because we are concerned about the debt sustainability of member countries.” However, they point out, currently, “if we look at the performance of the bond markets, we don’t seem to see particular concern about the sustainability of Italian debt.”

It acknowledges a situation that certainly offers guarantees about Italy’s reliability and, at the same time, allows the Minister of the Economy, Giancarlo Giorgetti, to conduct a trip to Brussels without any particular qualms at next week’s Eurogroup and Ecofin meetings (March 10 and 11, respectively).

There is more to it in these considerations being made in Brussels. There is a defense plan aimed at rearming Europe that will allow member states to open the taps on public spending, including high-debt countries like Italy. The plan somewhat convinces Prime Minister Giorgia Meloni, who nonetheless looks at the health of public finances. She says she favors increased defense spending in principle — as it is a NATO objective before an EU one — but she would like to avoid further aggravating the fiscal situation.

For this reason, the Premier already said at the end of the extraordinary summit of EU heads of state and government that Giorgetti will propose to his European counterparts to “imagine European guarantee instruments for private investment along the InvestEu model.” Not loans but grants, then. It will be hard to sell the idea to partners, particularly those in Northern Europe, who are cautious about resorting to forms of debt mutualization too quickly.