Government Hikes 2023 Deficit Target Due to Economic Slowdown, Superbonus Scheme

Summary

  • The government ramped up its 2023 deficit target from 4.5% to 5.3% of GDP in response to the economic downturn and the “superbonus” scheme. The extension of the program under ex-PM Mario Draghi steepens the cost.
  • The superbonus is expected to exceed 100 billion euros ($110 billion) by the end of this year, despite the government stepping in to limit its progress.
  • Public accounts are in trouble, according to Giorgetti. He mentions that they’re still waiting for the latest cost figures and reiterated that the scheme costs 4.5 billion euros per month.

Expansion of 2023 Deficit Due to Economic Slowdown

The government previously increased the 2023 deficit goal to 5.3% of GDP, up from 4.5%. The economic downturn’s effect on public finances was magnified by the “superbonus” scheme.

Superbonus Scheme and Its Financial Impact

The superbonus campaign, which was implemented in 2020 and continued under past Prime Minister Mario Draghi, is expected to exceed 100 billion euros ($110 billion) by the year’s close. This is the case even though the government has stepped in to restrain the scheme.

Challenges in Public Accounts

“The difficulty lies in controlling public accounts,” Giorgetti informed the Senate’s reporters. He expressed the need for updated information to confirm whether this year’s deficit target would be met.

“We are looking forward to the most recent cost projections,” he said. He emphasized: “the superbonus is costing us 4.5 billion euros per month.”

The exchange rate is as follows: 1 dollar equals 0.9074 euros.

The evolving fiscal situation and the increase in the deficit target may affect the currency markets, potentially impacting the euro’s trading value.

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