From the next 24 January l’Italy he will dedicate himself to the elections of the new President from the Republic. A significant event that could affect the stability of the government and on the agenda of reforms of the country. 2022 is a crucial year for the executive, committed to double the objectives achieved in 2021, with many measures in the pipeline that should be enacted in the second quarter of the year. It seems inevitable that there may be delays, but the reforms must not stop. Supporting the progress of legislative reforms and implementing growth potential could positively affect the sustainability of public debt and in turn Italy’s rating assessment which is currently BBB (high), Stable, according to DBRS Morningstar experts.
The investiture in Draghi
The broad support enjoyed by the premier Draghi by many parties, it makes him the main candidate to fill this important institutional role. This would be the first time in the republican history of Italy that a prime minister leaves his post to become President of the Republic and this eventuality would obviously generate doubts about the stability of the government, as his eventual successor could have difficulty in earning him. same majority support in a parliament as fragmented as the Italian one.
The reassurances of the experts
The experts of the rating agency DBRS Morningstar they don’t seem too worried, precisely because theItaly is a country historically accustomed to elections frequent e instability governmental. And if it is not possible to find a new prime minister supported by the current majority, a government supported by a smaller majority could still be born. This eventuality would obviously weaken the reform process, even with respect to those envisaged under the PNRR. There could be less political consensus and more disagreements, also because we are approaching the elections that will be held at the beginning of 2023. On the other hand, the risk of going to early elections seems to be reduced.
The bogeyman of early voting
Nonetheless, should you go to elections anticipate, the reform agenda would be delayed for practical reasons, due to the formation of the new government. And in any case, with a clear majority united by the early vote, new life could reach the stability of the country and accelerate the implementation of the plan again. According to DBRS Morningstar, Italian political parties are highly incentivized to achieve the objectives set by the PNRR which will allow them to receive financial resources from the EU.
Therefore, for analysts the reforms they will continue, albeit with some delay. There Commission European has already provided 24.9 billion euros to Italy in August 2021 and should receive more in the coming months 24.1 billion relating to all measures implemented in 2021. Achieving the objectives of 2022 it is a precondition for being able to achieve well 46 billion euros, the largest share of funding of the year. And although the current government could vary, Draghi’s presence for seven years as President of the Republic would guarantee accountability, international credibility and a pro-European attitude. Furthermore, Mario Draghi could press so that the executive does not lose the right momentum on the reforms on the agenda. DBRS Morningstar does not foresee changes of scenery, even in the event of the re-election of Mattarella or another name. Because keeping Draghi in the role of prime minister would ensure the rapid progress of the PNRR. At least until the 2023 elections.