Should Italy Sell Its Nonfinancial Assets to Reduce the Debt?

May 1, 2008

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Format: Chicago

Stefania Fabrizio. Should Italy Sell Its Nonfinancial Assets to Reduce the Debt?, (USA: International Monetary Fund, 2008) accessed September 20, 2024

Disclaimer: This Policy Dicussion Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper assesses the proposal, publicly debated in recent years in Italy, to reduce public debt by selling public assets, especially nonfinancial tangible assets. The main findings indicate that, although selling public assets has some merit if done to make more productive use of them, practical complications abound. Moreover, such sales might weaken underlying fiscal discipline. Other heavily indebted countries have reduced their debt much more than Italy without heavy recourse to extraordinary sales. In this context, the case of Belgium is of particular interest. Weighing the trade-offs, if properly and transparently done, the sale of public assets can complement, to a limited extent, fiscal consolidation, but should not be considered as an alternative to it.

Subject: Asset and liability management, Asset management, Debt reduction, Expenditure, Fiscal consolidation, Fiscal policy, Government asset and liability management, Public debt, Public financial management (PFM)

Keywords: Asset, Asset management, Debt, EU country, Europe, Exit from the European Exchange Rate Mechanism, Fiscal adjustment, Fiscal consolidation, Government, Government asset and liability management, Government organization, Italy, Italy in EMU, Italy's debt, Nonfinancial asset, PDP, Public debt reduction, Public net worth, Stability programme, Strategy for managing public assets, Sustainability of public finances, U.K. government

Publication Details

Pages:

15
Volume:

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DOI:

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Issue:

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Series:

Policy Discussion Paper No. 2008/001
Stock No:

PPIEA2008001
ISBN:

9781451945959
ISSN:

1564-5193

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