The 2019 Budgetary Policy Report develops the testimony given at the hearings before the Budget Committees of the Chamber of Deputies and the Senate of 9 October, 12 November and 27 December 2018, expanding the analysis on the basis of the data available as of 18 January 2019.
The first of the three chapters of the Report examines the macroeconomic scenario, which in December was revised from that contained in the Update to the Economic and Financial Document and in which the forecast for Italy’s GDP growth in 2019 has been reduced from 1.5 to 1 per cent. The PBO, which did not validate the scenario in the Update, considered the new framework to be plausible, since, despite a divergence of 0.2 points in the forecasts for real growth in 2019, the projection for nominal GDP growth is consistent. However, appreciable downside risks were noted, which in December appeared to be greatest for the 2020-2021 period. However, information on both the Italian and European economies released after the evaluation of the new MEF scenario has increased fears of an unfavourable turn in conditions in the short term as well. An update of the analysis of Italian economic conditions and the outlook for 2018-2020 will be published in the coming days.
The second chapter provides an overview of the budget package and its contents in light of the changes made by Parliament after the agreement reached with the European Commission, which had threated to initiate an excessive deficit proceeding against Italy. In particular, the trend in the public accounts in 2018-2021 is analysed with reference to the policy scenario proposed by the Government, to developments in the debt/GDP ratio, to the fiscal stance, to the potential threats to achievement of the objectives and to their consistency with the EU rules on the structural balance, expenditure and the debt.
The last chapter evaluates some of the main measures of the budget package. In particular, it examines the changes involving taxation, tax amnesties and measures to fight tax evasion, the measures for public employment, for families and the fight against poverty, and the main measures concerning capital expenditure, healthcare and local government finances.
