more than double compared to 2022- Corriere.it

What exactly is happening to Italian public finance will be better understood in the coming months. Certainly the first six of the year, although negative, are not enough to draw definitive conclusions. it is possible that certain temporary imbalances are destined to be reabsorbed. It is inevitable that the wave of home-bonus tax credits will begin to make their effects on cash requirements and debt felt, in the form of lower revenues (while the accrual deficit has already included them in recent years, which is evaluated in Brussels). And it is certain that there are no signs of concern in the Ministry of the Economy. Yet the trend in demand in the first six months, updated on Monday by the ministry itself, is markedly worse than the corresponding period a year ago. In June, the cash deficit in the state accounts, at 13.2 billion euros, was almost double that of June 2022.

The doubling of red

The cumulative result in the first half is therefore very different from that of last year: the cash balance of the state sector is negative by 95 billion in the middle of the year, against the 42.8 billion requirement recorded after the first six months of a year ago . Basically this year, after the first semester, there is much more than a doubling of the state’s cash flow. a figure that analysts are keeping under observation. Last year, a requirement of 42.8 billion after six months led, at the end of the year, to a deficit of 5.6% of gross product (before upward revisions due precisely to the impact of real estate bonuses). This year, a six-month cash requirement more than doubled to 95 billion in theory should lead, at the end of the year, to a deficit reduced to 4.5%.

The public finance target not out of reach

Not at all that the government’s public finance target is out of reach, on the contrary. This year 20.7 billion needs must be deducted from the deficit – the one assessed in Brussels – because they derive from lower revenues for real estate tax credits which have in fact already been discounted in the annual accounts for the 2020-2022 period. Furthermore, thanks to growth and inflation, the base of the Italian economy at the end of 2023 should be over two trillion: a higher denominator which, proportionally, slightly reduces the burden of debt and deficit. Yet the state’s cash flows remain negative beyond what is justified by the bonus tax credits. Even without calculating the latter, the requirement after six months is double compared to a year ago.

From Pnrr to inflation

In its most recent note, the Mef recalls the adjustment of pensions to inflation and the higher withdrawals of local authorities. In previous notes, the State Accounting Office also mentions the lower profits transferred by the Bank of Italy and the delay in payment of the third installment of the National Recovery Plan. But it is striking that revenues grew by only 1.8% in the first five months – those from indirect taxes even dropped – even if the combination of growth and inflation would lead to the prediction of a more robust revenue. Whether a return to escapism or some other factor makes itself felt will be understood over time. Of course, these data do not make the next budget law easier, nor the tax reform announced by the government.