Italy’s sovereign debt rating received a boost on Friday, March 13, 2026, as Fitch Ratings affirmed the country’s ‘BBB+’ rating with a stable outlook. The upgrade, the first since 2021, reflects improved fiscal performance and increased political stability under Prime Minister Giorgia Meloni’s leadership, according to the agency.
Fitch noted that Italy’s large, diversified, and high value-added economy, coupled with the stability provided by its membership in the European Union and the Eurozone, underpin the rating. But, these strengths are offset by a very high level of public debt and limited growth prospects in the medium term, factors that constrain fiscal flexibility and the ability to reduce debt.
The agency highlighted Italy’s substantial public debt as the primary limiting factor on its rating, citing reduced fiscal space and heightened sensitivity to negative shocks affecting growth or interest rates. Debt-to-GDP ratio stood at 137.1% in 2025, slightly above the previously forecast 136.5%. Fitch projects this ratio to peak at 137.8% of GDP in 2026 before beginning a downward trajectory. The baseline scenario anticipates a reduction of at least 1 percentage point of GDP per year starting in 2027, driven by sustained primary surpluses and moderate nominal growth.
The deficit-to-GDP ratio decreased to 3.1% in 2025, compared to 3.4% in 2024, aligning with both government expectations and Fitch’s projections. Further moderate improvements are expected, with the deficit forecast at 2.9% in 2026 and 2.7% in 2027. This positive trend suggests Italy is making progress in managing its fiscal challenges, a key factor in the rating agency’s decision.
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