Italian Audit Court calls for public debt cut in response to aging population
"In the coming years, public finances will be significantly affected by the aging of the population," the report said. This will have "more acute effects than previously thought" on pensions and health care spending.
The Court said that at current trends, spending on pensions will cause a growth of Italy's debt-to-gross domestic product (GDP) ratio by 30 points while the Italian population will shrink by 6.5 million by 2070.
"The rapidly aging population will exert very significant pressure on public spending in all European countries, including Italy," the Audit Court said in the report.
It also added that a cost-cutting pensions reform introduced in 2011 by the government of Mario Monti while Italy was in the midst of a sovereign debt crisis will bring down the projected incidence of pension spending on GDP by 60 percentage points by 2050.
The rightwing League party and the populist Five Star Movement, which currently form the coalition government in Italy, pledged to repeal the reform and vowed to introduce a basic income for all and drastic tax cuts for businesses and individuals.
"It is crucial not to create additional pension-related debt (in order to) safeguard long-term financial sustainability," the report warned. "Today's policies will influence tomorrow's spending."
Italy's public debt stood at 2.3 trillion euros ($2.7 trillion), or 131.8 percent of the GDP, by the end of 2017, according to the Italian National Institute of Statistics.
By comparison, that ratio stood at 97 percent in France, 64 percent in Germany, and 182 percent in Greece, according to the International Monetary Fund.
In 2017, Italy spent almost 114 billion euros, or 6.6 percent of its GDP, on health care and over 250 billion euros, almost 16 percent of GDP, on pensions, according to the report. ■