15:01 GMT31 May 2020
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    ROME (Sputnik) - The Italian government intends to reduce state debt by stepping up the privatization process, as follows from the explanatory tables to the draft state budget for 2019.

    "[These measures are being taken to] accelerate the decline in the ratio between the state budget deficit and GDP and prevent the risks of possible macroeconomic shocks," Italian Minister of Economy and Finance Giovanni Tria said in a letter to the European Commission sent along with the new draft budget to explain the economic strategy of the Italian government.

    According to the new draft budget, Italy’s debt-to-GDP ratio will drop to 126 per cent in 2021 from over 132 per cent in late 2017.

    READ MORE: EU-Italy Budget Standoff to Weigh on Eurozone Economic Growth

    Nevertheless, the government decided not to change the main parameters of the draft state budget for 2019, despite the fact that the European Commission rejected the document on October 23, giving Rome three weeks to revise it. The deadline for submitting a new draft state budget to Brussels expired on Tuesday at midnight (23:00 GMT).

    According to the tables attached to the new version of the draft law on the state budget, which was again reviewed at a government meeting late on Tuesday evening, the government plans to reduce sovereign debt to 129.2 per cent of GDP by selling state-owned objects in 2019. The possible boost to Italy's GDP from privatization next year was revised to 1 per cent from 0.3 per cent in the previous versions of the document.

    READ MORE: 'Elephant in the Room' Bond Market: Italy Not Trying to Align With EU — Scholar

    The European budgetary rules stipulate that EU members should keep its debt-to-GDP level below 60 per cent and make efforts to cut debt if it is above the limit. Italy's debt-to-GDP ratio has stagnated around 132 per cent over the past four years, the second highest rate in Europe after Greece. By June, the country's debt grew to an all-time high above 2.3 trillion euros ($2.64 trillion).

    READ MORE: EU May Sanction Italy Over Budget if Deal Not Reached — EU Commissioner

    draft, budget, state debt, European Commission, Italy
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