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Italy's high public debt creates structural vulnerability and needs to be brought down gradually, Parliamentary Budget Office (Upb) Lilia Cavallari said on Tuesday, Azernews reports, citing ANSA.

The Italian economy "has shown resilience and capacity to react to the energy shock", and growth prospects "remain favorable in the short term", but "structural vulnerability factors remain, first and foremost the high level of public debt, and downside risks in the medium term", said Cavallari, presenting the Fiscal Policy Report.

The restrictive monetary policy "contributes to tightening credit conditions on the financial markets" and the debt burden "is expected to increase in the coming years and will divert increasingly large resources away from productive uses," she added.

Therefore, "sound and sustainable public finance is essential to maintain conditions of financial stability, without which there is no growth.

"This requires continuity in the strategy of gradual reduction of debt trends," concluded Cavallari.

Last Thursday the Bank of Italy said public debt had hit a new high of 2,811.6 billion euros in April, rising by 21.8 billion with respect to March.

The increase reflected the increase in Treasury liquid assets (+10.9 billion to 40.3 billion) and general public sector borrowing requirements (9.1 billion), as well as the effect of bond issue and redemption discounts and premiums, revaluation of inflation-indexed securities, and changes in exchange rates (1.8 billion), the central bank said.

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