Italy faces EU accounting change that could add billions to public debt

By Giuseppe Fonte

ROME (Reuters) - European Union authorities are considering an accounting change that would increase Italy's towering public debt, two sources with knowledge of the matter told Reuters, adding the Italian authorities were in negotiation.

The change would make Motorway operator Autostrade per l'Italia a public entity, meaning its up to 11.5 billion euros ($12.47 billion) in financial liabilities would be counted as public debt, the sources said. They spoke on condition of anonymity because of the sensitivity of the matter.

Unless Italy can dissuade the European Commission's statistics arm Eurostat to abandon the change, it could add as much as half a percentage point of gross domestic product to the country's debt-to-GDP ratio and complicate Italy's pledge to Brussels to reduce it.

Proportionally the highest in the euro zone after Greece, Italy's debt reached 135.3% of GDP in 2024 up from 134.6% the year before.

Autostrade shot to international attention following a bridge collapse in Genoa in 2018.

The company changed hands in May 2022 for 9.3 billion euros when a consortium of investors bought the toll-road group from the Benetton family, ending a legal dispute triggered by the collapse of a bridge Autostrade operated that killed 43 people.

Following the deal, it is controlled by state lender Cassa Depositi e Prestiti alongside U.S. fund Blackstone and Australia's fund Macquarie.

The Italian state lender, which has 356 billion euros in gross debt, is outside the public administration as it operates with a profit-driven approach, but Eurostat monitors its activities.

A third source said that if Eurostat changes Autostrade per l'Italia's status, that implies an increased risk Cassa Depositi e Prestiti will also be reclassified, which would further aggravate the country's public finances.

Asked to comment, representatives from Eurostat said the statistical office is in constant dialogue with member states about statistical issues, including the classification of units in the public administration sector.

Autostrade per l'Italia's "present classification" is outside the general government sector, they added.

GOVERNMENT MANDATE

Eurostat officials visiting Italy in November 2022 investigated whether Cassa Depositi e Prestiti had received a mandate from the government to buy the motorway operator, according to a public report outlining Eurostat's findings at the time.

Marking its autonomy from the government on strategic decisions, Cassa Depositi e Prestiti said it viewed the purchase as a profitable investment and needed the support of its co-investors to decide on issues affecting the company, the report added.

Eurostat also visited Italy in mid-November 2024.

Its findings are not expected to be published before August, but one of the sources said Italy had been unable so far to convince Eurostat the government had not prompted Cassa Depositi e Prestiti to invest in the motorway operator.

The statistics bureau in recent years forced Italy to classify as inside the general government sector several state-controlled firms, including bad loan manager AMCO.

Italy expects its debt to rise through 2026 to almost 138% of GDP due to the lingering effect of a costly state-funded home renovation scheme, even though it has been largely phased out.

($1 = 0.9219 euros)

(Additional reporting by Angelo Amante in Rome and Elvira Pollina in Milan, editing by Giselda Vagnoni and Barbara Lewis)