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Debt-laden Giorgia Meloni's govt puts Italy's ‘crown jewel’ up for sale
Analysts, however, claim that the sale will do little to reduce Italy's ‘mountain of debt’.
Italy is mulling to sell a stake of its postal service, which its Prime Minister Giorgia Meloni once declared as the country's 'crown jewel', to tackle a huge public debt, AFP reported on Monday.
The hard-right administration led by Meloni has set a target of generating 20 billion euros ($21.6 billion) by 2026 through the divestment of a portion of Poste Italiane.
Poste Italiane, known for its lucrative insurance and banking activities, along with holdings in the rail company Ferrovie dello Stato and the energy giant Eni, is a key focus for the government's financial strategy.
Analysts, however, claim that the sale of a portion of Poste Italiane will do little to reduce Italy's “mountain of debt” which exceeds 2.8 trillion euros ($3 trillion) – the second highest in the eurozone as a proportion of gross domestic product.
"Our approach will be light-years away from what we have seen in the past, when privatisation rhymed with gifts for lucky entrepreneurs," Meloni was quoted as saying by AFP last week.
The leader of the post-fascist Brothers of Italy party, who won the 2022 elections on a populist, nationalist ticket, has also vowed to maintain state control. "We can sell some stakes in public companies without compromising public control," Meloni said.
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Meloni's stance is a shift from her public statement in 2018 during which she had opposed any privatisation of the Poste Italiane. "No to the privatisation of Poste Italiane. It is a crown jewel that must remain in the hands of Italians," she said on Facebook at the time, according to AFP.
The government originally planned to hold a 51% majority in Poste Italiane, but Finance Minister Giancarlo Giorgetti on Friday that its stake could fall to as low as 35%.
The move by Meloni's government is being opposed by Italy's Opposition, which also includes Matteo Salvini's far-right League party.
"The government always claims to be for the homeland and today it is starting to sell the homeland", Andrea Orlando, a lawmaker from the centre-left Democrat Party, said on Sunday. "We think that the homeland cannot be sold."
The initiative for partial privatisation began in November with the government's decision to sell a 25% stake in the rescued financial institution, Monte dei Paschi di Siena – recognized as the world's oldest bank – for a sum of 920 million euros, according to AFP.
Rome pursued the sale to investors after encountering challenges in securing a suitable buyer to acquire the bank. The privatisation of Monte dei Paschi di Siena is a requirement mandated by the bailout conditions established in agreement with the European Commission.
The Giorgia Meloni government has a long way to go to reduce a debt that amounts to 140.2% of the GDP. The government expects the asset sales to reduce the ratio to 139.6 % in 2026. Without this, it would rise to 140.6%.
"These partial privatisations are just a drop in the ocean, they do not reduce the risk of seeing the debt increase," Nicola Nobile, chief Italian economist at Oxford Economics, told AFP. "They are not a structural remedy, they don't alter the big picture."
