Michal Andrle, Shafik Hebous, Alvar Kangur, and Mehdi Raissi
INTERNATIONAL MONETARY FUND
Published in late 2017, the Italian medium-term fiscal plan aims to achieve structural balance
by 2020, although concrete, high-quality measures to meet the target are yet to be specified.
This paper seeks to contribute to the discussion by (i) assessing spending patterns to identify
areas for savings; (ii) evaluating the pension system; (iii) analyzing the scope for revenue
rebalancing; and (iv) putting forward a package of spending cuts and tax rebalancing that is
growth friendly and inclusive, could have limited near-term output costs, and would achieve
a notable reduction in public debt over the medium term. Such a package could help the
authorities balance the need to bring down public debt and, thus, reduce vulnerabilities while
supporting the economic recovery.