REDIRECTING PUBLIC EXPENDITURE IN ITALY
PUBLIC SPENDING EFFICIENCY AND BUDGET REFORM
Danila Malvolti and Mauro Mare (Ministry of the Economy and Finance Italy)Paper completed: February 20081. Objectives and key challenges
For almost two decades now Italy has been suffering from low economic growth compared to other
major advanced countries, resulting in stagnant population, productivity which does not increase and loss
of competitiveness. Low economic growth is compounded by the need to reduce the public deficit and
general government debt. Under the described scenario, important measures have been introduced by
2007 Budget Law in order to:
(i) define a credible path to get rid of budget deficit (close to balance) by 2011;
(ii) reduce public debt as a percentage of GDP close to (below) 100%;
(iii) improve the quality and efficiency of public expenditure.As far as net borrowing is concerned, according to the 2008 Forecast and Planning report^1 , it amounts to
2.4 of GDP and it is forecasted to go from 2.2 per cent of GDP in 2008 to 1.5 per cent of GDP in 2009,
and 0.7 per cent in 2010, prior to reaching a balanced budget in 2011 (see table 1).
(^1) The complete report is available on the internet site:
http://www.tesoro.it/web/DFP/index_int_RPP.asp?rrp=2008&docId=18234