(MENAFN- AzerNews)
By Trend
Pushed by a weaker euro and higher prices, Italy's public debt
reached an all-time high at mid-year, the Bank of Italy announced
Tuesday, Trend reports citing Xinhua .
The Public Finance Supplement of the bank's monthly bulletin,
released Tuesday, said debt totaled 2.766 trillion euros (2.812
trillion U.S. dollars), the highest it has ever been in absolute
terms. The total is 1.9 percent higher than the 2.714 trillion
euros (2.759 trillion dollars) at the start of the year.
A weaker euro has been one of the contributors to the rising
debt level, as most of Italy's debt is priced in euros. In late
June, when the data in the Bank of Italy report was tabulated, the
dollar and euro began trading on roughly equal footing with the
dollar briefly surpassing the value of the euro multiple times in
July.
Higher prices have been a mixed factor to the growing public
debt, the Bank of Italy said.
Higher prices have pushed tax revenues higher: the Bank of Italy
report said tax revenue has increased by 11.9 percent in the first
six months over the same period last year, adding an additional
23.2 billion euros (23.6 billion dollars) to government
coffers.
But inflation combined with other factors such as political
uncertainty in the country and worries about the economic impacts
of the Ukraine crisis have pushed bond yields to their highest
levels since 2014. As of Tuesday, the yield on Italy's benchmark
10-year government bonds was 3.135 percent. That is down from a
peak of over 4 percent in mid-June, but up from 1.089 percent at
the start of the year.
Higher bond yields, a reflection of investor nerves about a
country's economic prospects, increase the government's costs for
borrowing money.
Increased public spending is another major factor behind the
increase in the country's debt load, as the government took steps
to help the country emerge from negative economic impacts of the
COVID-19 pandemic.
One factor helping Italy's debt-related situation this year is
the return of tourism. According to the Italian JFC Observatory,
tourist tax revenue is up nearly 80 percent so far this year
compared to the same period 2021, as the sector rebounded from the
travel restrictions from the pandemic.
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