Moody's upgrades Italy credit rating on "policy stability"

US ratings agency Moody's lifted Italy's credit rating on Friday, citing "a consistent track record of political and policy stability," while shifting the country's outlook from positive to stable.

The move raises Italy's ratings from "Baa3" to "Baa2," and comes after the eurozone's third-largest economy also won upgrades from Fitch Ratings and S&P earlier this year.

Moody's said Friday that stability in Italy "enhances the effectiveness of economic and fiscal reforms and investment implemented under the national recovery and resilience plan."

The agency added that this points to the prospects of more policy actions supporting growth and fiscal consolidation beyond the plan's deadline in August next year.

"As a result, we expect that Italy's high government debt burden will gradually decline from 2027 onwards," Moody's Ratings said.

Italy's minister of economy and finance, Giancarlo Giorgetti, welcomed the upgrade, saying it was "further confirmation of the renewed confidence in this government and therefore in Italy."

On Italy's outlook, Moody's added that reforms to boost public sector efficiency and the wider business environment could help the country's growth prospects.

But it acknowledged risks in the path towards lowering Italy's high debt burden.

Fitch's move in September marked a validation of plans pursued by the government of Prime Minister Giorgia Meloni, and Moody's announcement on Friday marked a key reinforcement of that.