Italy’s public debt rose to the highest level since Benito Mussolini won elections 89 years ago, paving the way for his 20-year dictatorship.
The CHART OF THE DAY shows debt jumped in 2012 to 127 percent of gross domestic product from 120.8 percent a year earlier. That’s the most since 1924, when Mussolini won 64 percent of the popular vote in elections that opposition members said were marked by irregularities. The chart is based on data from the Bank of Italy and national statistics office Istat.
“Nowadays, reducing debt-to-GDP ratio is challenging, much more than it used to be,” said Fabio Fois, an economist at Barclays in Milan. “Cutting unproductive public expenditures and increasing growth potential are the only viable measures. Maintaining a large primary surplus position over the medium term must remain a policy goal.”
As the spending cuts and tax increases passed by outgoing Prime Minister Mario Monti helped Italy raise its primary surplus to 2.5 percent of GDP last year, the euro region’s third-biggest economy contracted 2.4 percent. Still, interests on debt rose last year by 10.7 percent and the budget deficit amounted to 3 percent of GDP, within European Union limits. The national debt was also increased by the cost of bailing out the euro region’s distressed countries including Greece and 1.9 billion euros ($2.5 billion) in derivatives.
Before Mussolini took power, Italy’s debt had peaked at 159 percent of GDP in 1921, data compiled by Bloomberg News show. It was at 152.9 percent in 1924 before falling to 111.3 percent in
Monti’s policy mix prompted 25 percent of voters in last month’s inconclusive election to back the anti-austerity stance of comedian-turned-politician Beppe Grillo’s Five Star Movement, which was the single most voted party in the country.