June 8, 2020 / 11:36 AM / a month ago

Italy's debt unsustainable, will face eventual restructuring: Schroders

AMSTERDAM (Reuters) - Italy’s debt is unsustainable in the long term and will eventually require a restructuring, Schroders’ senior European economist said on Monday.

The southern European economy, hit hard by the coronavirus pandemic, is having to raise even more debt on top of its hefty debt pile at 134% of GDP. This ratio is expected to rise to as high as 159% this year.

Italy’s debt “now does look unsustainable over the medium, long-term. Some kind of debt restructuring will have to happen,” Azad Zangana, senior European economist and strategist at Schroders told Reuters.

“The only real way around this is they’re either bailed out by the rest of Europe or they restructure the debt, or both. But because Italy is the third largest member state, it’s very difficult to bail them out for a long time,” Zangana said.

Reporting by Yoruk Bahceli; Editing by Dhara Ranasinghe

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