Italy: Public debt sustainability seems feasible | Eurobank
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Italy: Public debt sustainability seems feasible

• Italy has come to the bond markets’ spotlight due to high level of debt combined with weak growth prospects.
• Successful execution of the fiscal consolidation program is required to lower borrowing costs and put debt dynamics on a sustainable path.
• Successful implementation of structural reforms would boost the country’s long term potential economic output and allow public debt to decline faster.
• On the positive side, healthy private sector balance sheets imply that there is potential to fund the public sector.
• Italian banks are vulnerable to sovereign risk due high exposure to government bonds. However, the banking sector fundamentals remain solid.