Moody’s, Italy rating towards the cut without reforms and Pnrr- Corriere.it

Without reforms (and without Pnrr) Italy’s rating could be cut. The Moody’s agency, pending the formation of the new government and the developments of the EU monetary policy, has published a report in which it analyzes the situation of the Bel Paese. In detail, in the update on Italy’s sovereign credit profile, the agency attributes a Baa3 rating to our country with a negative outlook. That is, a debt subject to existing, albeit moderate, credit risk. Thus ends the period of upward adjustments for the Italian rating by Moody’s.

In giving its evaluations, the agency looks at the growth of the Bel Paese going so far as to say that the rating cut could take place: If we were to foresee a significant weakening of the country’s medium-term growth prospects, perhaps due to the failure to implement reforms che promote development, including those envisaged by the NRP. The analysts then write: The right-wing coalition that won the recent elections could try to renegotiate some aspects of the PNRR. This is likely to delay its implementation, putting downward pressure on investment spending at a time when high inflation and energy supply risks are already weighing on economic activity. Moody’s assessment could improve, the text reads, if Italian institutions, growth prospects and the debt trajectory prove resistant to the risks deriving from political uncertainty, energy security and rising financing costs.

Lastly, Italy pays, like other countries, for geopolitical uncertainties and the energy crisis. While growth and fiscal developments have produced positive surprises in 2021 and early 2022, tighter financing conditions, high inflation, risks to Russian energy supplies and a more complex political environment are weighing on Italy’s growth prospects and debt dynamics, conclude from Moody’s.