World Economy

Moody’s May Cut Italy Rating

Moody’s May Cut Italy RatingMoody’s May Cut Italy Rating

Italy’s rating may be cut by Moody’s over concerns about the new government’s fiscal plans and the risk that some important past measures, such as pension reform, might be reversed, Bloomberg reported. While “some of the coalition parties’ original proposals have been modified in the final coalition agreement, they would still lead to a weaker, not a stronger, fiscal position going forward,” the agency said in a statement late Friday. “So far, Moody’s has assumed a gradual deficit reduction over the coming years, which in turn would allow for a very gradual decline in the public debt ratio.” Italy’s public debt stood at €2.3 trillion ($2.68 trillion) at the end of March, according to the nation’s central bank. With the second-biggest public-debt ratio in the eurozone, pledges by the new government of increased spending have unsettled financial markets. The Italy-Germany 10-year yield spread reached the widest since 2014 earlier on Friday. Italy is currently rated Baa2 by the agency, the second-lowest investment-grade rating.

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