Italian sell-offs: state will keep fingers in many pies

Receive free Italian economy updates

We’ll send you a myFT Daily Digest email rounding up the latest Italian economy news every morning.

Privatisation talk is in the air as Italy prepares its 2024 budget. Finance minister Giancarlo Giorgetti has been dropping some heavy hints. Yet it is hard to see the government led by Prime Minister Giorgia Meloni relinquishing any measure of control over the local economy. The outcome could be a privatisation molehill, rather than a mountain. 

Italy is struggling under a debt load that is above 140 per cent of GDP. The market value of stakes in companies might be some €50bn-€60bn. But Italy is unlikely to have the appetite for anything like that sort of a sale. 

The government has more than a few heirlooms in its attic. These include large stakes in energy giants Eni, Enel, Snam, and Terna. The state also owns all of rail group Ferrovie Dello Stato, and is set to plough a couple of billion euros into private equity giant KKR’s takeover of Telecom Italia’s network.

The balance is a lucky dip comprising shares in troubled lender Monte dei Paschi, postal service Poste Italiane and defence group Leonardo.

Meloni’s rightwing politics do not embrace free markets, however. Witness the summer’s misguided windfall tax on banks and a mooted cap on airfares.

Debt rules meanwhile create disincentives to sell-offs. Under Italian law, proceeds from asset sales cannot fund budget deficits. They can only be counted to offset debt. And even tens of billions of euros would be a drop in the ocean compared with Italy’s €2.8tn of debt. 

This means the government may limit itself to sales that are clearly necessary, or easy to do. This suggests it will press forward on the sale of 41 per cent of Ita Airways to Lufthansa, via a €325mn capital increase. It may accelerate the sale of its 64 per cent stake in bailed-out bank Monte dei Paschi, which has a market capitalisation of €3.2bn. And it may trim its shareholdings in Poste and energy group Eni, while maintaining control.

None of these are bad ideas. But we are firmly in the realm of tinkering while Rome burns.