IMF: The Recovery plan for Italy, an opportunity to have a smarter, green and more inclusive economy

IMF: The Recovery plan for Italy, an opportunity to have a smarter, green and more inclusive economy
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27 Apr 21

Sole 24 Ore - Radiocor

As it recovers from the pandemic, Italy will have a smarter, greener, and fairer economy. Word of the Monetary Fund that offers the country its recipe to start again. A boost to investments, if efficiently spent and supplemented by growth-stimulating reforms, can help regain lost ground in terms of productivity and accelerate the transition to a "greener, smarter (i.e.: 'intelligent use of technologies) and more equitable economy.

The International Monetary Fund in its traditional annual 'report card' to Italy, in addition to an estimated GDP growth (by 8% in 2021-2022) and a flattering judgment on the interventions made in facing the emergency, offers an indication of the virtuous path to follow to prevent "scars" on the economy. 

The Italian Recovery plan, as per the final remarks in the so-called 'Article 4' mission to Italy report (from the article of the statute of the Washington institution indicating the tasks of political and economic surveillance towards Member countries), will define extensive medium-term investments and reforms, financed by substantial EU resources, to foster the digital and green transition, increase the economic growth potential and ensure wider gender balance. Implementing the Plan will also increase demand, helping to compensate part of the production lost due to the pandemic and mitigate the risk of remaining "post-pandemic economic scars".

Well-defined rules to modernize the Public Administration, rationalize civil procedures and the judicial system would help to reverse the traditional Italian slowness in implementing reforms by improving, at the same time, the framework of rules to encourage the establishment of international companies (the certainty of contracts for all). Reducing regulation that poses barriers to competition and enhancing transparency and accountability of public procurement is another recommendation from the IMF. According to Washington 'inspectors' "it will also be crucial to fully collect the economic and social dividends from public investments".

Beyond the Recovery Plan, the Fund economists add, the country needs a global tax reform involving the rise of the tax base that would foster growth, inclusion and, at the same time, the fight against tax evasion. In identifying the path to take, however, one must avoid stumbling on the first steps. One of the first things to do is therefore a careful selection of credit to help companies that are healthy but in need. Therefore, restoring the financial health of those companies able to return to being profitable and allowing, a delicate issue, the soft exit from the market of those having instead little chances of survival, would provide a sound basis for recovery. A rapid and vigorous rebound in activity, the Fund's economists point out, is the best cure for the business sector.

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