WASHINGTON: Fitch Ratings has upgraded Italy’s credit rating in a significant endorsement of Prime Minister Giorgia Meloni’s two-year fiscal austerity programme.
The agency increased Italy’s rating to BBB+ from BBB while maintaining a stable outlook for the eurozone’s third-largest economy.
This positive development followed Fitch’s recent downgrade of France’s credit rating from AA- to A+.
“The upgrade reflects increased confidence in Italy’s fiscal trajectory,“ Fitch stated in its assessment.
The agency cited Italy’s growing record of fiscal prudence and commitment to European Union fiscal targets as key factors behind the decision.
Fitch also acknowledged Italy’s stable political environment and ongoing reform momentum in its evaluation.
Other eurozone nations including Spain and Portugal have similarly received recent upgrades from rating agencies.
Italy achieved 0.7% GDP growth in both 2023 and 2024, falling short of government projections despite this modest expansion.
The country has dramatically reduced its public deficit from 7.2% of GDP in 2023 to just 3.4% last year.
France’s downgrade last week reflected concerns about its soaring debt levels projected to increase until 2027 without intervention.
French borrowing costs have now risen to nearly match Italy’s rates for the first time since the euro’s introduction in 2002.
Fitch attributed France’s downgrade to political instability threatening public finances following a parliamentary confidence vote.
The agency praised Portugal’s substantial debt reduction and strong record of prudent fiscal policy in its recent upgrade.
Italy nevertheless maintains a significantly higher debt burden at 135% of GDP compared to France’s 113%.
The country faces challenging medium-term prospects due to low productivity and an aging population. – AFP