Italian Finance Minister Pier Carlo Padoan is confident that measures implemented by his government to strengthen a fragile banking sector will deliver dividends, based on a declining debt forecast and a number of government reforms.
The country, whose banking system has been embattled with non-performing loans (NPLs) amounting to more than 300 billion euros ($353.8 billion) following a prolonged recession, recently enjoyed an upwardly revised growth forecast of 1.5 percent for 2017 and an upgraded credit rating from ratings agency S&P.
Speaking to CNBC in an interview on Tuesday, he said, "We expect debt to decline aggressively over the near future" because of higher nominal growth.
Asked if he believed the Italian government's policies to reduce NPL numbers were on the right track, Padoan said, "The net stock of bad loans has fallen by as much as 25 percent in 2017, thanks to a mechanism which is beginning to gain momentum and speed, meaning a secondary market for NPLs. These are market driven operations. So the system, which is looking at a very severe financial crisis in the recent past, is now moving towards a more normal configuration, also thanks to measures introduced by the government in terms of accelerating mitigation procedures."