Italy promoted by Moody's, but the country still risks. Here because

Italy's debt is not junk, so stated Moody's latest assessment of November 17th.
The outlook was surprisingly raised from negative to stable and the rating remained unchanged at Baa3, in a decision that the Meloni Government is already celebrating as its victory.
The agency had rated our country with a negative outlook in August last year, following the political fall of the Government and in the midst of an energy crisis that had particularly affected the nation.
Yesterday's decision "reflects a stabilizing outlook for the country's economic strength, the health of its banking sector and public debt dynamics," Moody's said in a note.
But is Italy really out of danger when it comes to growth and debt sustainability? The Italian economic future is still shrouded in some shadows, that is, by chronic problems that the country is urgently called to resolve.
Moody's gives confidence to Italy.
But the country still has weak points Moody's basic scenario is that the fiscal deficit of the public administrations in Italy will be equal to 4.4% of GDP in 2024.
The rating agency also predicts that the debt/GDP ratio will reach 140.3% in 2023, down from 141.7% in 2022, but about 6 percentage points higher than before the pandemic.
Deficit and debt are undoubtedly Italy's weak points.
In this regard, an analysis by the Public Accounts Observatory a few days ago underlines precisely that the IMF has warned Italy to be more ambitious in budget adjustment and to encourage more growth and structural reforms which are instead lacking in the Law of Balance.
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The study also states that: "If we abstract from the 2020-2023 period, in which increases in the deficit were justified by the subsidies necessary to deal with the pandemic before and after then energy shock, the deficit/GDP forecast by the government for 2024 is greater than that of 2019 and previous years, despite the fact that Italy's GDP is already higher than that of 2019." And again: “For a country with Italy's public debt, there is no doubt that it is necessary to reduce the deficit to keep the debt under control…Italy continues to be burdened by the weight of past errors, which have led to a very high public debt and a very low growth rate…
This analysis adds the consideration that in recent years trends towards increased spending have been consolidating, which the public budget will hardly be able not to take on".
The reference is to ever-increasing needs for the State – Italy but not only – to support with public money the increase in inequalities and poverty, the energy transition with the industries called for change, social security and health care for the elderly population growing and the payment of interest on the debt which is soaring with the ECB policy.
The call, therefore, is for a wise and efficient reduction in public spending, especially if supported by debt, through growth plans that are structural.
Italy barely escaped recession in the third quarter and the economy is not expected to contract during 2025, as it is expected to benefit significantly from the PNRR, according to European Commission forecasts published last week.
Nonetheless, the outlook was bleak for public finances.
The Commission projects that the deficit will reduce to 4.3% in 2025 and that the debt will represent a percentage of output exceeding 140% in the next two years.
Figures still not sustainable.
Given that Moody's has flagged public finances as an area of concern, such a profile will likely keep the ratings firm very closely watching Italy's economic dynamics.
After all, our country is only one step higher than junk debt and the uncertain global context does not help us hope for a quick and easy recovery.