Fixed extra grains. NADF, GDP Revised Downward

Good and less positive news on the fiscal front characterized yesterday. The positive aspect relates to the accounting standards for the classification of the 110% additional tax credits which Eurostat still considers “payable” and thus calculable in the year this measure is used, freeing the receiver from this burden. Less good is Nadiv’s growth estimates, which will be approved by the Cabinet today.

GDP forecasts for 2023 and 2024 will be revised downward with the trend downward for GDP from +0.9% (+1% programmatic) to +0.8% for this year and from +1.4% of the given estimate to +1% for the following year. This adjustment will have a significant impact on the deficit, and pending the executive meeting, the Minister of Economy, Giancarlo Giorgetti, is invited to choose the macroeconomic profile he prefers. But it is precisely on this point that Eurostat’s response to a question from Istat comes to our rescue. The Community Statistical Institute believes that the super bonus earned in 2023 should be recorded in the public accounts as a tax credit payable in 2023. Regarding the calculation of the super bonus accumulated in 2024, Eurostat has asked Istat to conduct a review, at the latest by the end of the first half of 2024, taking into account the development of the issue of outstanding tax credits and, above all, the cessation of the transfer of credits that could lead to a further review to “non-payable”, and therefore to be distributed over the ten years of the deduction’s validity. Istat highlighted that losses on non-performing loans are not significant at the moment.

What does all this mean in practice? This type of fiscal spending can be balanced in 2023 while keeping 2024, the year in which the Stability Pact will return into force, relatively “clean” on the deficit front. That is why the government is considering raising the expected deficit ceiling this year to between 5% and 6% from 4.5%, and emptying between 20 and 25 billion in deficit after what happened in 2020 (from 9.5% to 9.5% to 25.6%). 9.7%, 3.3 billion), for 2021 (from 7.2% to 9%, 32.2 billion) and for 2022 (from 5.6% to 8%, 49.6 billion). In this case, all of the appropriations that will be compensated, amounting to $110 billion, will be “covered” (the estimated total is $130 billion).

If this approach from the point of view of deficits and debts for 2024 can contribute to securing accounts by calming the markets, it is clear that there will not be many resources left for this maneuver. The Treasury would be willing to raise the trend deficit (from 3.5 to 3.8%) and the program deficit (from 3.7 to 4.2-4.3%). In this way, the deficit of 4.5 billion will remain certain to be added to the ministries’ savings (300 million) and other revenues such as the tax on additional profits to ensure a reduction of the tax wedge by 9-10 billion). However, the intention will be to develop a light maneuver between 20 and 25 billion that includes even a minimal revision of Irpef rates to save the wedge cut from changing the tranche at least for incomes up to a total of 28 thousand euros. And also because it will be necessary to defuse the plastic and sugar tax mine worth a total of 1.3 billion this year as well. Finally, we need to give a signal about infrastructure. As Deputy Prime Minister Salvini stressed yesterday regarding the Strait Bridge, the goal is to guarantee financing “in an amount not exceeding 12 billion euros distributed over the next 15 years.” But without forgetting the decline in debt, which in 2022 reached 141.9% of GDP.