Everything must go

10 August 2012 By Neil Unmack Follow @unmack1

Fears of relentless austerity have prompted a flurry of proposals from Italian politicians and academics on ways to cut the nation’s debt through asset sales. Some ideas may be impractical, others have failed in the past. But the chorus of calls for action gives reason for hope.

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The Italian government will make proposals in September to cut the country’s debt, according to an Aug. 8 report by Reuters, citing comments from Pier Ferdinando Casini, a senior Italian politician, who in turn cited comments by Prime Minister Mario Monti. Casini’s comments come after a flurry of proposals by politicians and academics on ways to cut Italy’s debt through asset sales.
Vittorio Grilli, finance minister, said in an interview with Corriere della Sera in July that asset sales could total 15-20 billion euros a year. The government’s current strategy involves managing and selling assets including property and local utilities through three funds. It will also sell government stakes in three companies, Sace, Fintecna and Simest, to Cassa Depositi e Prestiti, the state-owned bank for 10 billion euros. According to Corriere della Sera, the government expects total asset sales of 15 billion euros over the next 12 months.
Astrid, a think-tank, proposed that the government sell 72 billion euros of property over the next five years, with total asset sales of 142 billion euros over that period, including 39 billion euros next year. The proposal, which also includes various tax and fiscal measures, hopes to cut Italy’s debt by 11.5 percentage points of GDP by 2017, or 178.5 billion euros. The proposal was signed by Giuliano Amato, a former Socialist prime minister, and various Italian academics.
The centre-right Popolo della Liberta party has also made a proposal to set up a fund to acquire 80 billion euros of public assets a year, funding itself by issuing highly-rated secured debt. The fund would acquire 400 billion euros of property, and cut Italy’s debt to below 100 percent of GDP over five years, according to comments made by Angelino Alfano, secretary of the PdL.

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