Sinergy between economics and finance: new financial instruments to support private investments
The output of an economic system depends on its capital, whose increase raises the level of the output. The increase in capital is determined by investments, defined by Olivier Blanchard as “the purchase of new assets by companies and houses by individuals” (Source Macroeconomia – Una prospettiva europea). Consequently, investments are crucial as for the growth of an economic system. However, in the long run, investments are a dependent variable. Their increase is subordinate to the increase of savings to finance investments.
The consequences of the latest economic and financial downturn have impeded the relaunch of private investments in Italy. Savings meant to finance investments have decreased progressively since individuals could any longer renounce to some of their consumption (as savings) in order to invest in the purchase of assets. Furthermore, banks, from whom Italian enterprises depend, have been forced to reduce financial loans for various reasons (presence of non -performing loans, inadequate capital return, strict binding rule on the matter). All these factors have negatively affected private investments and, finally, economic growth.
Over the last years, the Italian Government has relied on the financial offer in order to relaunch private investments. In 2014, the Ministry of Economic and Finance, the Ministry for Economic Development and Bankitalia adopted “Finance for Growth”, a package of measures to support private investments (Source Il Sole 24 Ore). “Finance for Growth” has three pillars: investments support; funding access; capitalization and stock exchange listing. On the basis of these three pillars, EUR 5 billion have been allocated to support private investments. Access to new assets has been facilitated thanks to “Nuova Sabatini”, with a 15% tax credit for additional investments (which are different from tangible, instrumental investments). In addition, through Aiuto alla Crescita Economica (ACE), “Finance for Growth” establishes a tax relief as for capital return and it provides the enterprises that opt for stock and exchange listing with a 40% increase in capital for three years (so-called “Super-ACE”). For those companies that refuse the stock and exchange listing, “Finance for Growth” envisages the possibility to deliver the so-called “Minibond” (see “Mini-bonds: invest in Italy in order to help little and medium sized enterprises”, inserire hyperlink http://www.robertodiacetti.it/mc/510/mini-bonds-invest-in-italy-in-order-to-help-little-and-medium-sized-enterprises), debt securities with a high number of tax benefits. Finally, in May 2016, the Government established the Fondo Atlante to support Italian banks in managing non-performing loans, thus helping them to re-start giving loans to enterprises (Source Ministero dell’Economia e delle Finanze).
The support to private investments in Italy comes also from the European Union (UE). The Investment Plan for Europe (also known as “Juncker Plan”) aims at mobilising investments of at least EUR 315 billion in three years (Source European Commission). The Juncker Plan was adopted on 15 July 2014 (Source EUR-LEX) and its main pillar is the European Fund for Strategic Investments (EFSI) which, through a mechanisms of financial guarantees, wants to overcome current market failures by addressing market gaps and relaunch private investments. EFSI supports strategic investments in key areas such as infrastructure, education, research and innovation, as well as risk finance for small businesses. Cassa depositi e prestiti (Cdp) is among the National Promotional Banks of the Plan, with a EUR 8 million commitment. In June 2016, Italy was declared the first beneficiary of the Juncker Plan. Over the last 12 months, Italy has received EUR 1, 4 billion from the European Bank for Investment (BEI) in order to finance 8 infrastructure projects and EUR 353 million to support 44,840 small and medium enterprises (Source La Repubblica).