By Silvia Marchetti
ROME (MaceNews)- After more than a year in power, Italian Prime Minister Giorgia Meloni is getting a ‘political makeover’ to take a more moderate stance and lure investors willing to support the country’s funding needs, say opposition forces.
“She’s abandoning her neo-fascist rhetoric and revisiting her hard core, nationalist rightist policies in an attempt not only to lure centrist voters, but mainly to reassure markets on Italy’s debt sustainability and attract bond investors which she badly needs,” said a Democrat member of the Lower House.
“We’re concerned she might be eyeing also the disillusioned share of our Democrat voters who appreciate the recently-approved financial aid to low income families, after she scrapped the 5 Stars’ citizenship wage,” the Democrat.
Centrist voters, scattered across many small parties, on the other hand are being enticed by what may appear as her reassuring stance on the European stage, and the way with which she’s liaising with the European Union for the pandemic funds, while targeting a leadership role at EU-level.
In foreign policy, Meloni has backed aid to Ukraine despite her past ties with Moscow, which is reassuring the US, and is now advocating trade and energy deals with African countries to reduce the number of refugees landing on Italian shores.
Recent polls show support for Meloni’s Brothers of Italy party has grown by 5 percentage points in the past few weeks, as she takes voters also from her ally rightist party the League and the 5 Stars Movement in the opposition, the latter which has undergone a ‘centrist’ metamorphosis.
A 5 Stars senator noted that the main reason behind Meloni’s makeover was to encourage investors to keep financing Italy’s outstanding EUR 2.8 trillion public debt, the second-largest in the Eurozone after Greece.
“Italy needs to raise some €300 billion worth of new securities this year, and re-open already existing maturities for €150 billion. Meloni needs that money also to meet borrowing requirements and to fund key tax cuts she has promised,” said the 5 Stars member.
Now that the European Central Bank’s ‘shield’ is coming to an end, with its unwinding of accommodative policies and increase in rates, Italy can no longer rely on help from Frankfurt to maintain investor confidence in Italy’s public debt sustainability.
“Borrowing costs have risen and Meloni is a far cry from Mario Draghi, whose reputation and global standing alone was enough to soothe markets and keep the spread in yield between German and Italian bonds low,” said another Democrat source.
Meloni needs markets to “welcome” her new 2024 budget, and can no longer rely on the heritage of Mario Draghi. The 2023 budget had been pre-defined by Draghi, but now she’s on her own in crafting brand new economic policies and fiscal targets, added the deputy.
Meloni is also revisiting many aspects of her nationalist positions and appears open to privatizing key state companies in an attempt to raise cash.
The government is considering whether to sell part of postal service Poste Italiane, one of the largest state-held companies, that handles a large chunk of Italians’ pensions. Rome would retain a majority stake, and aims to raise €20 billion from the sale.
Per Italian law, all extra resources generated through privatizations must go into cutting the country’s public debt. They cannot be used to fund pro-growth measures or cut taxes, argued a ruling coalition source.
“We’ve already sold a 25% stake in Italy’s oldest lender, Monte dei Paschi di Siena, for EUR 920 million, as part of our plan to rescue the bank from default. Our approach in offloading state companies, or of key national interest, will be gradual and we will always take into account national interests,” said the official.
The government expects the asset sales to reduce the country’s debt-to-GDP ratio, currently at 140.2 percent, to 139.6 percent in 2026.
“We must change course because without a balanced, sound privatization plan the ratio would rise to 140.6%,” warned the official.