(Reuters) -Global ratings agency Moody's on Friday upgraded Italy's sovereign rating to "Baa2" from "Baa3", citing the country's consistent track record of political and policy stability.
"Italy is making
good progress in meeting the milestones and targets of the National Recovery and Resilience Plan, leading among all EU countries in terms of number of payment requests and disbursements," the agency said in a statement.
Moody's has upgraded Italy's rating for the first time since May 2002, when it passed from "Aa3" to "Aa2", and the rating has not changed since a downgrade in October 2018.
"We are pleased with Moody's upgrade, the first in 23 years. This is a further confirmation of the regained confidence in this government and, therefore, in Italy," Giancarlo Giorgetti, the country's economy minister, said in a statement.
Italy expects its 2025 deficit to fall below 3% of GDP this year, ahead of schedule. The government had earlier pledged to cut the fiscal deficit to 3.3% of GDP this year, down from 3.4% in 2024.
Reducing the fiscal deficit to less than 3% of GDP this year would allow Italy to exit the EU infringement procedure for excessive deficits by mid-2026.
"We expect that Italy's high government debt burden will gradually decline from 2027 onwards," Moody's added.
Moody's further revised Italy's outlook to "stable" from "positive", citing the balance between its credit strengths and challenges. The agency had lifted Italy's outlook in May to positive, on stronger-than-expected fiscal performance and a stable political backdrop.
While challenges from Italy's aging population and high debt burden persist, fiscal discipline and political steadiness provide some relief.
(Reporting by Sri Hari N S in Bengaluru, Giuseppe Fonte, Gavin Jones, Valentina Consiglio and Alvise Armellini; Editing by Alan Barona)
