Crown jewels put up for sale to ease debt

“Not for the privatization of Poste Italiano, it is a gem that should remain in the hands of Italians,” Giorgia Maloni said on Facebook in 2018. Now Prime Minister of Italy, however, he is preparing to sell shares to international investors. The ultraconservative government’s aim: to raise 20 billion euros by 2026 through privatization to stem the explosion of public debt that represents the highest ratio in the euro zone after Greece.

In addition to the post office, which is highly profitable due to its insurance and banking activities, the state wants to sell part of its shares in railway company Ferrovi dello Stato and hydrocarbon giant Eni. But for Ms Maloney there is no question of selling public assets: “Our approach would be a few years away from what we saw in the past, when privatization meant handouts to lucky entrepreneurs. »

And above all, the state wants to keep control of its jewels: “We can sell some shares in public companies without compromising public control,” assured the head of the post-fascist Fratelli d’Italia party. If initially the government planned to have a majority of 51% in the post office, Finance Minister Giancarlo Giorgetti on Friday mentioned a minimum threshold of 35%.

The Public Treasury owns 29.26% of Poste Italiane to which 35% of the Italian Case des Depots (CDP) is added. If it sold its entire stake, it would collect 3.9 billion euros, or about a fifth of the targeted 20 billion.

In the name of Motherland

This partial privatization megaplan was heavily criticized by the opposition. The government has “always claimed the motherland and today it has started selling the homeland. We believe that the homeland cannot be sold,” said Andrea Orlando, deputy of the Democratic Party (center left), on Sunday. Georgia Maloney, however, intends to “strengthen the state’s presence where necessary,” as in the case of the former Ilva Steelworks, on the brink of financial strangulation.

Privatization was launched in November, with the placement on the market of 25% of the capital of Monte dei Paschi di Siena, of which the state previously held 64%, for 920 million euros. Rome, which must withdraw from the bank’s capital to comply with European Commission rules on state aid, sold the shares to investors who failed to find a buyer.

Another privatization in progress due to demands from Brussels, Lufthansa’s entry into the capital of ITA Airways, the public company born from the ashes of Alitalia, is blocked for the moment, however, due to competition fears. International investors are “all very interested” in Italian state participation, Giancarlo Giorgetti assured Wednesday.

“A drop of water in the ocean”

Thanks to the expected revenue, Rome wants to reduce the public debt ratio from 140.2% to 139.6% of GDP in 2026, instead of 140.6% in the absence of this measure. Is this enough to reverse the course of the enormous debt reaching more than 2,800 billion euros? “It is just a drop in the ocean, this privatization does not reduce the risk of seeing an increase in debt. This is not a structured solution, Nicola Nobile of Oxford Economics told AFP.

And above all, the state wants to keep control of its jewels: “We can sell some shares in public companies without compromising public control,” assured the head of the post-fascist Fratelli d’Italia party. If initially the government planned to have a majority of 51% in the post office, Finance Minister Giancarlo Giorgetti on Friday mentioned a minimum threshold of 35%. Millions of Euros per year in the case of the post office.

“These semi-public companies like Anne are well managed and pay good dividends that the government gives in exchange for a lump sum,” Lorenzo Codogno, former chief economist at the Italian Treasury, explained to AFP. And according to him, there is nothing to indicate that the amount of 20 billion will be collected: “It is a very ambitious objective that will be difficult to achieve”.

20 minutes with AFP