Italy has made progress in consolidating its public finances, but debt remains too high, and growth risks are increasing due to geopolitical tensions and rising energy prices. Especially in a country with such a high debt stock, “measures to mitigate the impact of rising energy prices should be budget-neutral, temporary, well-targeted, and not dampen the incentive to reduce energy consumption.
” In a report on Italy, the International Monetary Fund (IMF) rejects the across-the-board cut in excise duties on diesel and gasoline, introduced by the government in March and subsequently extended at each deadline, albeit gradually weakened. This measure cost a total of over €2 billion, only partially offset by the VAT increase, which, according to IMF economists, should be replaced with “targeted cash transfers to the most vulnerable households.”
