Italy wants more public debt in domestic hands

By Giuseppe Fonte

ROME (Reuters) – The Italian government aims to place an increasing proportion of the public debt in domestic hands, Economy Minister Giancarlo Giorgetti said on Tuesday.

In a speech to bankers in Rome, Giorgetti said the recent success of bond issues dedicated to Italian retail investors was

“a very important sign” of trust between the government and savers.

“That is part of a broader strategy aimed at placing the main part of the public debt within our country, as it should be,” he said.

Italy has collected around 45 billion euros ($47.93 billion) this year through the issuances of the ‘BTP Valore’ and ‘BTP Italia’ bonds, both products specifically earmarked for retail investors.

Data from the Bank of Italy showed that in July foreign investors held a 27.4% stake of the country’s 2.84 trillion euro public debt.

To further boost domestic holdings, Rome introduced in its 2024 budget a measure to partly discount government bond income from the ISEE, an indicator of wealth that determines access to welfare benefits under government means testing.

Under the bill, still subject to change in parliament, taxpayers can deduct a maximum of 50,000 euros in sovereign bonds and investment products for small savers whose repayment is guaranteed by the state.

The proposal drew criticism from the opposition and academics, who said it would blunt welfare programmes’ focus on the poor.

Giorgetti on Tuesday stressed the need for the Treasury to consolidate the “confidence of savers and markets in Italy” against a difficult economic backdrop in which the risk of a new global recession “is not entirely unlikely.”

The Treasury last month raised its budget deficit targets for the 2023-2025 period, worrying markets and setting it up for a possible clash with the European Commission.

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