Fitch Ratings raised Italy's outlook from stable to positive on Friday, nodding to stronger fiscal performance recently and commitment to EU fiscal rules.
Fitch improves Italy's outlook
Those factors point to a possible reduction in risks coming from the country's exceptionally high debt levels, the agency said.
In the same report, Fitch affirmed Italy's credit rating at "BBB."
The verdict came days after Italian lawmakers adopted a draft 2025 budget financed partially by a new tax on insurance companies and a temporary freeze on tax credits for banks.
The budget also includes tax cuts for low-income families – a key issue for far-right Prime Minister Giorgia Meloni.
As in last year's budget, ministers sought to balance electoral promises with the need to reduce deficits and avoid adding to Italy's mounting debt.
Targeted by the EU for its "excessive" deficits, Italy is under pressure to balance its books and reduce a debt close to three trillion euros.
Fiscal credibility has increased
On Friday, Fitch noted that Italy's positive outlook "is reinforced by signs of stronger potential growth and a more stable political context."
"In our view, Italy's fiscal credibility has increased, and the 2025 budget underscores the government's commitment to EU fiscal rules," Fitch added.
It expects the country's fiscal deficits to narrow to 3.2% of GDP next year, and to 2.7% in 2026.
