Should Italy Sell Its Nonfinancial Assets to Reduce the Debt?

Author/Editor: Fabrizio, Stefania
Publication Date: May 01, 2008
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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.
Series: Policy Discussion Paper No. 08/1
Subject(s): Public debt | Italy | Debt reduction | Asset liquidation | Fiscal policy | Public finance

Author's Keyword(s): Public debt reduction | public net worth | sustainability of public finances | fiscal adjustment | strategy for managing public assets
Publication Date: May 01, 2008
Format: Paper
Stock No: PPIEA2008001 Pages: 13
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