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Does the government cut pension expenditure to get back into debt?

Guest Houses: in the circles of politics we begin to talk about a possible cutting spending on pensions per get back into debt produced during the COVID-19 pandemic.

On the other hand, the Minister of EconomyRoberto Gualtieri – did not hide that it will be necessary to provide a return program, with the Italian pension system that could be among the main suspects. Once again – after 2011 with the reform “tears and blood”Approved by the Monti government – pensions could be used to make cash.

And if then reform was necessary – as clarified by Fornero – “because without it it would not have been possible to pay all the pensions”, This time it could be the health and economic emergency that has forced us to cut.

Until a few months ago, unions and the government were discussing how to go about making the Italian pension system is more flexible; now the scenario has changed and if there is a reform there will be only for save on public accounts.

The government needs to repay the debt produced during the emergency

To date there is no certain information regarding a pension cut. But rumors are circulating about it, with many politicians who believe it will be for the government inevitable reform of the pension system to be part of the debt produced during the health emergency which in the most affected countries – including Italy – has had important repercussions on the economy.

For Italy the impact will be very hard: the IMF has estimated a surge in Italy for our country public debt that could get to 166% of GDP. It is true that at the moment the European Union has relaxed its constraints and that therefore there is not much to worry about, but it is true that sooner or later the situation will return to normal and for our country the time will come to pay the bill.

And on that occasion Italy’s public debt will be a not insignificant problem; for this reason, already after the summer, the Minister of Economy will present a excess debt repayment schedule. This was confirmed by Gualtieri himself, who explained that the Relaunch Plan that the Government has been developing in recent weeks will take into account the “financial compatibility“And this will also contain a”return strategy from high public debt”.

Cutting pensions to get back into debt?

In the Relaunch Plan with which Italy should use the resources arriving with the Recovery Fund there are several objectives to achieve: important investments to revive the country’s economy.

But on the other hand in the same project there will also be a public debt repayment program who should have one duration of about 10 years. This is because, as stated in the document prepared by the Government:

Italy’s high public debt represents a brake on economic growth as well as a heavy burden on public finance. The Relaunch program will therefore be accompanied by an update of the Stability Program which will present not only new projections up to 2023, but also a plan to recover the debt / GDP ratio over a ten-year horizon

In this regard it remains to be understood how Italy intends to get back into debt, especially in the event that the investments made do not give the desired results.

We talk about “rationalization of public expenditure“And it cannot fail to come to mind what has been done in the past with the Fornero Law. Cutting the cost of pensions is a possibility, with the after Quota 100 which could include an increase in the retirement age.

Nothing certain but the mere fact that we talk about it scares us. Why the emergency from COVID-19 has already had an impact on pensions in the medium term, we hope it does not have it even in the long term, further increasing the age for reaching the pension right.

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