Italy's 2017 Deficit, Debt Revised Up On State Aid to Banks
(Bloomberg) -- Italy’s 2017 public deficit and debt were raised to include the government’s winding down of Banca Popolare di Vicenza and Veneto Banca as well as the precautionary recapitalization of Banca Monte dei Paschi di Siena.
Last year’s debt was revised to 131.8 percent of gross domestic product, statistics bureau Istat said on Wednesday in Rome. That is up from a 131.5 percent preliminary estimate released on March 1 and slightly down from 132 percent in the previous year. The deficit for 2017 was revised to 2.3 percent of GDP from a preliminary 1.9 percent.
The state aid that allowed for the good assets of the failed banks to be bought by Italy’s second biggest lender Intesa SanPaolo SpA had a net impact on last year’s deficit of 4.7 billion euros ($5.77 billion), the European Union’s statistics office Eurostat said in a binding opinion Istat received on March 31 and released on Tuesday. “The direct and indirect debt impact at inception is 11.2 billion euros,” Eurostat also said.
The letter included a binding, final opinion on the recording of the state aid and followed an eight-month long consultation with Italy. Eurostat questioned the estimation by Italian authorities of cash inflows from future recoveries of assets that remained in the two Veneto banks, saying that the recovery rates were “not prudent enough.”
Istat and Eurostat also agreed on revising up the impact of Monte Paschi’s recapitalization on deficit and debt to 1.6 billion euros from a previous estimate of 1.1 billion euros.
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