Fitch cuts Italy’s debt outlook

MILAN: Fitch Ratings on Friday cut Italy´s sovereign debt outlook to ´negative´, citing expectations that the new coalition government´s fiscal loosening would leave the country´s high levels of debt more exposed to potential shocks.

The ´new and untested nature´ of the country´s populist government, which has been in office since June and is made up of the anti-establishment 5-Star Movement and the far-right League, also contributed to the decision, the agency said.

Fitch in June had warned that expansionary fiscal measures that could weaken Italy´s debt position would be the main risk to its credit rating. The agency retained its ´BBB´ credit rating, citing the country´s diversified economy.

Italy´s 2.3 trillion euro debt is the world´s third-largest and equivalent to more than 130 percent of its domestic output.

The new government has pledged to follow through on its electoral pledges to provide a minimum income for the poor, cut taxes and water down a 2011 pension reform.