Italy "is close to public debt sustainability". Fitch writes it in the biannual global report on sovereign ratings. For Spain, however, the forecast is for an increase in debt up to a peak of 95% of GDP in 2015, while Portugal will reach it in 2014.
Debt dynamics, underlines the credit rating agency, "continue to depend on the pace of deficit reduction, nominal GDP growth, the costs of supporting the banking sector and, to a lesser extent, the level of interest rates of interest. Uncertainty about the consolidation path, the high levels reached by debt and financial needs will continue to exert downward pressure on sovereign ratings”.
Fitch also underlines how the European authorities have recently decided, due to a weaker than expected demand, to give preference to a softer approach on the return of public accounts. Now, "the emphasis will be more on the implementation of well-defined measures rather than on the expected result".
The old orientation, that of setting strict targets that were regularly missed, "has failed in its main objective" which was "to restore credibility. In officially acknowledging that fiscal adjustment will take longer, political authorities now have a better chance of controlling expectations”.
