In the coming years, Italy will be able to unfold its growth potential only if it is able to complete the reforms provided for by National Recovery and Resilience Program (Pnrr). This, in summary, is the position expressed by Eugenio Gaiotti, head of the Department of Economics and Statistics of the Bank of Italy, during a parliamentary hearing on the Update note to the Economic and Financial Document (Nadef). The call of Via Nazionale acts as a counterpoint to some utterances coming from the center-right, where the emerging leaders - Giancarlo Giorgetti and Giorgia Meloni - are pushing to elect Mario Draghi to the Quirinale in early 2022 and immediately after going to early elections. A prospect that would inevitably jeopardize the possibility of respecting the commitments made by Italy on the reform front.
"As the Bank of Italy has repeatedly underlined - said Gaiotti - the assessment" of Nadef according to which "full implementation of the National Recovery and Resilience Plan, including reforms that accompany it, is the great challenge for the coming years; the support of demand alone could not ensure a return to stable growth rates".
In particular, the Nadef “prefigures a very sustained dynamic of the public investments - continues the Bank of Italy manager - which in the next three years would grow by 11% on average per year and at the end of the planning period would reach 3,4% of GDP, above the level observed in the years preceding the crisis financial year 2008-09. It is an ambitious goal and an essential component of stimulus programs, the achievement of which depends on a timely and effective implementation of the reforms aimed at simplifying and speeding up the expenditure procedures, while safeguarding the quality of the financed projects".
Gaiotti then underlined how "in the medium term the main risk factors" are associated precisely "with the implementation times and the effectiveness of the measures outlined in the Pnrr", as well as "with a possible slowdown in international trade". A “substantial contribution of the support action is incorporated in the trend framework; without it growth would be significantly lower” than outlined in the Nadef.
According to the assessments that the Bank of Italy reported in the Economic Bulletin of July, the measures of the Pnrr and those financed with the national budget defined until the summer can contribute to an increase in GDP by 4 percentage points accumulated in the three-year period 2021-23: "As we have had the opportunity to underline, the necessary prerequisite for the achievement of these results remains a full and timely implementation of the interventions", Gaiotti reiterated again.
For the tax reform - to the attention today of the Council of Ministers, called to approve the enabling law - Gaiotti remarked "the need to ensure adequate incentives for the job offer, to favor the necessary process of reallocating resources and to simplify and rationalize the complex of income support instruments and the tax system”. All this “avoiding overlaps, reducing the distorting effects of the current Irpef structure and intervening on the system of so-called tax expenditures”.
