Since the economic policy debate is already starting on the expected size of the Italian public debt that is increasing to contain the pandemic and which will further increase due to the use of the Recovery Fund, it is appropriate from now on to return to the often overlooked issues concerning both management and its composition and geographical distribution and among the holders of public securities; the latter subjects who obviously consider such public securities a component of their private financial wealth. Among these they must be remembered both central banks and saver households, as well as financial and non-financial companies, whether Italian or non-Italian.
They are public securities in private hands ready to get rid of it quickly should the most diverse combination of risk and return suggest it, if anything for some invasion of the field of popular-sovereign economic policy. As in the not too distant times of the gods minibot that I had the opportunity to comment on this publication.
Il Report on the public debt of 2019 edited by the MEF (now online) can help policy decisions to get out of the narrative oversimplification of the problem of public debt sustainability. The problem is too often reduced to the debt to GDP ratio, which grew from 105% in 2004 to 134% in 2019.
With reference to the composition of the public debt stock, the data referring to the last three years confirm this the preponderance of nominal and long-term BTPs which on average represent 61-62% of gross issues, followed by issues of BOTs for around 34-35%: the latter, as is known, are liquid in the short term and easily liquidated at the flurry of the most insane declarations of those in charge of economic policies .
It should be added, for example, that in the case of the issue of BTP Italia as at 20 October 2024, institutional investors accounted for 55-56% while retail subscribers (often saving households) accounted for the remaining 44% (cf. Cit Report . p..68). Among institutional investors, banks are the vast majority (55%), followed by investment funds with around 23%, by central banks and other public institutions (9%) and hedge funds (8%), while the remaining 5% went to insurance and pension funds.
With reference to the geographical distribution the Italian presence was dominant also in the institutional part, with 76% of the demand, followed by approximately 8% which went to British investors and a similar percentage was distributed in various areas of continental Europe.
Instead, in the case of syndicated issues by banks, 2035% of the BTP maturing in 36,3 was syndicated in Italy, 24,9% in the United Kingdom and 21,3% in Germany. (see Report p.58).
If they contribute decisively to GDP growth the carefully allocated resources of the Recovery Fund fundsFinally, let us not forget that in the medium and long term the ratio, to be placed side by side with the debt-GDP ratio, is the one that good economic literature has been reporting for some time. That is the ratio between the average cost of public debt compared to the monetary growth rate of GDP. This ratio which was 0,88 in 2017, 1,07 in 2018 and 0,93 in 2019, a sign of the political turbulence of that year 2018 also fueled by the indiscriminate race to get your hands on the funds expected from the EU. Ratio that could once again exceed unity if the announcements of economic policy on the use of new debts were not a consequence of the reforms requested by the EU.
In other words, sovereignty over Italian public debt securities it is forcibly shared and conditioned with that in the private hands of others ready to move immediately and careful not to overlook even the most ramshackle announcements such as those on minibots on gold in Mussolini's homeland.
