(Image source: La Presse)
Fitch confirms Italy’s stable outlook, but watch out for the Superbonus: it continues to weigh on public finances
Also Fitch confirms the rating of public accounts of Italy, BBB with stable outlook. A decision in the wake of those adopted in the last two weeks by S&P and Dbrs, now Moody’s judgment is missing, expected on May 31st. As he had already done in a paper in recent days, Fitch draws attention to the impact of the Superbonus on public finances – the data calculates approximately 219 billion euros paid out so far in favor of all building bonuses – assessing that this mass of tax credits could also lead to tensions within the government majority.
Italy’s rating is supported by its large, diversified and high value-added economy, membership in the eurozone and strong institutions compared to the peer group median. These credit characteristics are balanced by weak macroeconomic and fiscal fundamentals, notably very high government debt, large post-pandemic fiscal deficits, limited economic growth potential, all made more challenging recently by a higher yield environment,” Fitch notes According to the rating agency, Italy’s fiscal deficit “yes will reduce to 4.7% of GDP this year (the government forecast is 4.3%) from 7.4% in 2023 due to the gradual elimination of the Superbonus and the changes to its accounting from accrual to cash”. Precisely the spending for the Superbonus , Fitch notes, “has put the public debt burden on an upward trajectory in our baseline projection as it will feed into debt metrics over the next 10 years as credits are drawn down.”
The new EU reporting methods, which will be launched by September, could also impact the performance of public finances. Fitch’s estimate is that “the debt/GDP ratio increases to 142.3% in 2027 from 137.3% in 2023, building on a previously broadly stable path.” The rating agency sees “high uncertainty about the fiscal path beyond 2024. As this is a year of transition for the EU fiscal surveillance framework, Italy presented only a no-policy scenario in its Stability Program in April and is expected to present the policy path in April.” Fitch hypothesizes that the fiscal deficit “will will reduce moderately to 3.9% and 3.2% in 2025 and 2026 respectively.”
According to Fitch the public support for the Meloni government “remains strong, providing a platform for medium-term economic and fiscal planning.” For the rating agency, however, “the reduced fiscal space due to the higher-than-expected Superbonus spending could increase tensions between the coalition parties”. The government recently said that extending some of the one-off fiscal measures introduced in 2024 (amounting to 0.7% of GDP) will be its priority. According to Fitch “it may be difficult to implement without compensation measures, given the constraints of EU fiscal rules”.
Related
Pemex increases social investment in these 8 key states during the first quarter of 2024
Mexican oil (Pemex) increased their investment by 60.6 percent in the first quarter of 2024 in terms of social actions in the communities surrounding the oil zones.
This represented 388.3 million pesos during the first quarter of 2024, 145.6 million pesos more than in the same period of the previous year.
The investment went mainly to eight states, through 68 programs, where Pemex has greater presence:
- Campeche
- Chiapas
- Guanajuato
- New Lion
- Oaxaca
- Tabasco
- Tamaulipas
- Veracruz
Pemex returns to society what it has contributed in terms of oil resources
But the oldest investment was intended for Tabasco y Campeche with 52.55 percent and 36.02 percent, respectively, as a way of returning to society what their community has contributed in terms of oil resources.
The projects carried out include infrastructure in education, sports, environmental preservation, productive projects, health, public security and civil protection, in line with the objectives of the 20230 Agenda for Sustainable Development Goals (SDGs).
Octavio Romerogeneral director of Pemexsaid that Tabasco is one of the main levers of economic development and that it has become the head of oil production in the country thanks to the large reserves found.
“Mexico has a great debt with all the oil states… and it is a presidential instruction to return to them, especially to the southeast, the right to enjoy wealth, especially that related to oil”
Octavio Romero. CEO of Pemex
Pemex shares in oil stocks
Some social actions carried out by Pemex have been:
- Promote the improvement of the quality of teaching and access to education in the communities of oil environments through the delivery of school equipment and furniture in 40 schools in Oaxaca, Tabasco and Veracruz
- Improve two schools in Tihuatlán, Veracruz and Comalcalco, Tabasco
- Modernize the Joya de la Pita baseball field in Tierra Blanca, Veracruz
- Construction of the Tianguis Campesino of Comalcalco, Tabasco
- Boulevards, highways and roads were rehabilitated, built and paved in 10 locations in the municipalities of Nacajuca, Comalcalco, Jalpa de Méndez, Centro and Cunduacán, in Tabasco; Carmen, in Campeche and Reforma, in Chiapas
- 11 transfer ambulances were delivered to various locations
- Free general medicine and dentistry services through two Mobile Medical Units in Tabasco and Veracruz, providing approximately 19,130 general medicine and 4,570 dental consultations
Pemex increases social investment in these 8 key states during the first quarter of 2024
Budget: Primary surplus at 3 billion – Which taxes inflated revenue
– 2024-05-04 19:30:27
The tax revenue of this year’s budget moved above the target during the first quarter of 2024, which is also due to the extended accuracy. According to data from the Ministry of National Economy and Finance, the revenues of the “Taxes” category amounted to 14.844 billion euros, increased by 598 million euros or 4.2% compared to the target included in the introductory report of the 2024 Budget. However, VAT revenue amounted to 5.876 billion euros and is 16 million euros short of the target
At the same time, the primary result on an adjusted cash basis was a surplus of 2,987 million euros, against a target of a primary surplus of 2,133 million euros and a primary surplus of 3,079 million euros for the same period in 2023.
It is noted that most of the difference in the primary surplus against the target in cash terms is not counted in the 2024 primary result in fiscal terms. Indicatively, an amount of 159 million euros relating to revenues from the Recovery and Resilience Fund does not affect the result in fiscal terms, while a significant part of the difference in tax revenue collections of 647 million euros is counted in the fiscal result of the year 2023. Therefore the primary result in fiscal terms differs significantly from the result in cash terms. In addition, it is pointed out that the above refers to the primary result of the Central Administration and not to the whole of the General Government, which also includes the fiscal results of the Legal Entities and the sub-sectors of OTAs and OKAs.
Revenue
In the period January – March 2024, the amount of net revenues of the state budget amounted to 16,823 million euros, showing an increase of 430 million euros or 2.6% compared to the target included for the corresponding period in the introductory report of the 2024 Budget However, the reporting target included the collection in March of an amount of 1,797 million euros from the Recovery and Resilience Fund, most of which, i.e. 1,687 million euros, had been collected in December 2023. and an additional amount of €159 million was collected in January 2024.
Excluding the above amount, net income shows an increase of 2,069 million euros or 14.2% compared to the target. This increase is mainly due to: a) increased tax revenues by 612 million euros after deduction of refunds and b) increased PDE revenues by 1,029 million euros.
The total revenues of the state budget amounted to 18,507 million euros, increased by 416 million euros or 2.3% against the target.
More specifically, the revenues of the major categories of the state budget are as follows:
I. The revenues of the “Taxes” category amounted to 14,844 million euros, increased by 598 million euros or 4.2% compared to the target included in the introductory report of the 2024 Budget.
In particular, the following are observed for the main taxes of this category:
-VAT revenues amounted to 5,876 million euros and are 16 million euros short of the target.
-The revenues of the EFCs amounted to 1,532 million euros and are increased compared to the target by 5 million euros.
-The real estate tax revenues amounted to 260 million euros and are reduced compared to the target by 19 million euros.
-Income tax revenues amounted to 5,105 million euros and are higher than the target by 563 million euros, of which the
Personal Income Tax is increased by 66 million euros and Corporate Income Tax is increased by 451 million euros compared to the target.
II. The revenues of the “Social Contributions” category amounted to 15 million euros, in accordance with the target.
III. The revenues of the “Transfers” category amounted to 2,418 million euros, reduced by 700 million euros compared to the target included in the introductory report of the 2024 Budget mainly due to: (a) the collection in December 2023 of the amount of 1,687 million euros from the Recovery and Resilience Fund (Recovery and Resilience Fund), while an amount of 159 million euros was collected in January 2024, against a target of 1,797 million euros that was initially predicted to be collected in the month of March 2024 and (b) of the increased PDE revenues, by 876 million euros, against the target. In particular, of the above collected amount of 2,418 million euros, an amount of 2,133 million euros concerns PDE revenues.
IV. The revenue of the “Sales of goods and services” category amounted to 208 million euros, reduced by 7 million euros compared to the target included in the introductory report of the 2024 Budget.
V. The income of the category “Other current income” amounted to 1,007 million euros, increased by 508 million euros compared to the target included in the introductory report of the Budget 2024, mainly due to the increased income from expenditure reimbursements, by 283 million. euro. Of the above collected amount of 1,007 million euros, an amount of 203 million euros concerns PDE revenues which are increased by 153 million euros compared to the target.
VI. The revenue of the category “Sales of fixed assets” amounted to 15 million euros, against a zero target.
Revenue returns amounted to €1,684 million, down €14 million from the target (€1,698 million).
The total revenues of the Public Investment Program (PIP) amounted to 2,336 million euros, increased by 1,029 million euros from the target (1,307 million euros).
The image of March
In particular, in March 2024 the total net revenues of the state budget amounted to 4,175 million euros, reduced by 1,139 million euros compared to the monthly target, due to the collection from the Recovery and Resilience Fund (RAF) of an amount within December 2023, as mentioned above. Excluding this, net income shows an increase of 658 million euros, which is mainly due to a decrease of 449 million euros in revenue refunds due to the timing of their occurrence, as high amounts of refunds were realized in the month of February, while they were foreseen for the month of March. The total revenues of the state budget amounted to 4,652 million euros, reduced against the monthly target by 1,588 million euros.
More specifically, the revenues per major category of the state budget for February 2024 are as follows:
I. The income of the “Taxes” category amounted to 3,535 million euros, reduced by 260 million euros or 6.8% against the target. It is noted that the bank holiday on March 29 and April 1 affected the flow of tax collections for the month of March, as the deadline for payment of confirmed debts to the Tax Administration, which expired on the above dates, was extended until April 2. It is estimated that an amount of approximately 300 million euros, which concerns tax debts for the month of March, was paid on April 2 and will therefore be included in the income for the month of April.
In particular, the following are observed for the main taxes of this category:
-VAT revenues amounted to 1,433 million euros and are 143 million euros short of the target.
– The revenues of the EFCs amounted to 509 million euros and are reduced compared to the target by 35 million euros.
– The real estate tax revenues amounted to 44 million euros and are reduced compared to the target by 16 million euros.
-Income tax revenues amounted to 1,040 million euros and are 8 million euros short of the target.
II. The revenues of the “Social Contributions” category amounted to 5 million euros, in line with the target.
III. The revenues of the “Transfers” category amounted to 767 million euros, reduced by 1,463 million euros compared to the target included in the report of the Budget 2024, due to the collection of an amount from the Recovery and Resilience Fund (Resilience Fund) in 2023. Amount 702 million euros concern PDE revenues, which are increased by 290 million euros compared to the target.
IV. The revenue of the “Sales of goods and services” category amounted to 43 million euros, reduced by 24 million euros compared to the target included in the introductory report of the 2024 Budget.
V. The revenues of the “Other current revenues” category amounted to 302 million euros, increased by 158 million euros compared to the target included in the report of the Budget 2024. An amount of 2 million euros concerns PDE revenues, which are reduced by 12 million euros against the target.
Revenue returns totaled €476 million, down €449 million from the target (€925 million).
The total revenues of the Public Investment Budget (PDE) amounted to 704 million euros, increased by 278 million euros from the target (426 million euros).
The expenses
The expenses of the State Budget for the period January – March 2024 amounted to 16,867 million euros and are presented reduced by 343 million euros compared to the target (17,210 million euros), which is included in the introductory report of the 2024 Budget. They are also increased , in relation to the corresponding period of 2023, by 245 million euros, due to increased investment costs by 783 million euros.
In the part of the Regular Budget, the payments are shown reduced compared to the target by 1,007 million euros. This development is mainly due to the deferral of transfer payments to OKA by 523 million euros and the deferral of cash payments of the equipment programs of the Ministry of National Defense by 320 million euros. Conversely, i.e. incrementally in relation to the target, interest payments moved by 106 million euros and grants to other legal entities by 227 million euros. More specifically, 110 million euros were given by the Ministry of Rural Development and Food to ELGA, for the compensation of agricultural holdings affected by flooding due to the DANIEL-ELIAS disasters in September 2023, 78 million euros from the Ministry of Infrastructure and Transport as grant to transport agencies (OASA, OASTH and OSE) and 69 million euros from the Ministry of Health as a grant to the National Central Health Procurement Authority (EKAPY) to cover the cost of supplying medicines for the needs of the hospitals of the National Health Service and the General Hospital . Papageorgiou.
Payments under the investment expenditure arm amounted to EUR 2,812 million, showing an increase of EUR 665 million compared to the target, as the target was exceeded in both the PDE and the Recovery and Resilience Fund.
Source OT
Budget: Primary surplus at 3 billion – Which taxes inflated revenue – 2024-05-04 19:30:27