Exhibit 1
Recent Developments Update Dated November 8, 2005
The information included in this section supplements the information about the Republic of Italy that is contained in Exhibit D to the Republic’s annual report on Form 18-K, as amended, for the fiscal year ended December 31, 2003. To the extent that the information included in this section differs from the information set forth in the annual report, you should rely on the information in this section.
The Italian Economy
Based on ISTAT data, Italy’s real GDP increased at a seasonally adjusted rate of 0.7 per cent in the second quarter of 2005 and grew at an annual rate of 0.1 per cent during the year ended June 30, 2005. Italy’s seasonally adjusted average unemployment rate decreased to 7.8 per cent and 7.7 per cent during the first and second quarters of 2005, respectively, from 8.0 per cent during last quarter of 2004. Consumer prices, as measured by the harmonized EU consumer price index, increased at an annual rate of 2.2 per cent during the twelve months ended September 30, 2005.
Real GDP and Expenditures
The following table sets forth information relating to real GDP and expenditures for the periods indicated.
2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||
(euro in millions) | ||||||||||||||||||||
Real GDP | 1,015,077 | 1,032,985 | 1,036,945 | 1,039,581 | 1,052,308 | |||||||||||||||
Add: Imports of goods and services | 286,418 | 287,798 | 286,466 | 290,187 | 297,470 | |||||||||||||||
of which | ||||||||||||||||||||
Goods | 221,639 | 221,185 | 218,140 | 221,361 | 231,585 | |||||||||||||||
Services | 64,779 | 66,613 | 68,326 | 68,826 | 65,885 | |||||||||||||||
Total supply of goods and services | 1,301,495 | 1,320,783 | 1,323,410 | 1,329,768 | 1,349,779 | |||||||||||||||
Less: Exports of goods and services | 303,311 | 308,131 | 298,147 | 292,478 | 301,750 | |||||||||||||||
of which | ||||||||||||||||||||
Goods | 240,454 | 244,164 | 236,399 | 231,091 | 239,322 | |||||||||||||||
Services | 62,857 | 63,967 | 61,748 | 61,387 | 62,428 | |||||||||||||||
Total goods and services available for domestic expenditure | 998,184 | 1,012,652 | 1,025,263 | 1,037,290 | 1,048,029 | |||||||||||||||
Domestic expenditure | ||||||||||||||||||||
Private sector consumption | 611,570 | 616,427 | 618,920 | 627,722 | 633,815 | |||||||||||||||
Public sector consumption | 177,227 | 184,011 | 187,468 | 191,702 | 193,075 | |||||||||||||||
Total domestic consumption | 788,797 | 800,438 | 806,388 | 819,424 | 826,890 | |||||||||||||||
Gross fixed investment | 209,217 | 213,121 | 215,702 | 211,907 | 216,267 | |||||||||||||||
Changes in inventories | 171 | (906 | ) | 3,173 | 5,959 | 4,872 | ||||||||||||||
Total domestic expenditures(1) | 998,185 | 1,012,653 | 1,025,263 | 1,037,290 | 1,048,029 | |||||||||||||||
(1) | Total goods and services available for domestic expenditure do not match total domestic expenditure figures due to the effects of rounding. | |
Source: | Annual Report of the Bank of Italy (May 2005) for the year ended December 31, 2004. |
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Selected Balance of Payments Indicators 2000 through 2004
The following table illustrates the balance of payments for the periods indicated, including revisions of data previously published for 2000 through 2003.
2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||
(euro in millions) | ||||||||||||||||||||
Current Account | (6,305 | ) | (740 | ) | (10,014 | ) | (17,351 | ) | (12,035 | ) | ||||||||||
Capital Account | 3,195 | 936 | (67 | ) | 2,494 | 2,081 | ||||||||||||||
Financial Account | 4,287 | (3,294 | ) | 8,532 | 17,319 | 8,884 | ||||||||||||||
Errors and omissions | (1,177 | ) | 3,098 | 1,549 | (2,462 | ) | 1,071 |
Source: | Annual Report of the Bank of Italy (May 2005) for the year ended December 31, 2004. |
The deterioration in Italy’s current account reflects an improvement in invisible trade from a deficit of €2.4 billion in 2003 to a surplus of €1.5 billion in 2004, mainly due to a decrease in amounts spent by Italians abroad and a decrease in the income deficit from €17.8 billion in 2003 to €14.7 billion in 2004. This improvement was offset in part by a decrease in the visible trade surplus from €9.9 billion in 2003 to €8.8 billion in 2004 and an increase in the current transfers deficit from €7.1 billion in 2003 to €7.7 billion in 2004.
Italy’s financial account surplus decrease was principally attributable to net direct investment outflows of €2.0 billion in 2004 compared to net direct investment inflows of €6.5 billion in 2003 and an increase in net outflows from Italian banks of €11 billion, compared to net inflows to Italian banks of €40.6 billion in 2003. The decrease in Italy’s financial account was offset in part by an increase in the surplus in portfolio investment from €3.4 billion in 2003 to €26.4 billion in 2004, mainly due to a decrease in investment by Italians in non-Italian debt securities, higher investment by non-Italians in Italian equity securities, offset in part by a decline in investment in Italian debt securities by non-Italians.
Public Finance — General Government Revenues and Expenditures
The table below sets forth general Government revenues and expenditures for the five-year period ended at December 31, 2004. The table does not include revenues from privatizations, which are deposited into a special fund for the repayment of outstanding Treasury securities and cannot be used to finance current expenditures. Accordingly, proceeds from privatizations do not affect the financial balance, but, when used to repay outstanding Treasury securities, do contribute to a decrease in the public debt and consequently the ratio of public debt to GDP.
The following table reflects upward revisions to Italy’s net borrowing and public deficit statistics published by ISTAT in May 2005, following discussions between ISTAT and Eurostat in relation to:
• | the recording of payments to the Italian government by financial institutions that act as tax collectors (concessionari d’imposta), | |
• | the classification of government-owned entities, | |
• | the treatment of a government securitisation operation, | |
• | the recording of transactions with the EU budget, | |
• | inconsistencies between data on cash and accrual bases, and | |
• | statistical discrepancies in government accounts. |
Eurostat continues to be engaged in discussions with Italian authorities relating to the recording of transactions with the EU budget, inconsistencies between data on cash and accrual bases and statistical discrepancies in government accounts, which could lead to a further upward revision in Italy’s budget deficit for the period between 2001 and 2004.
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GENERAL GOVERNMENT REVENUES AND EXPENDITURES
2000(1) | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||
(millions of euro) | ||||||||||||||||||||
Expenditures | ||||||||||||||||||||
Current expenditures | 512,658 | 541,794 | 557,332 | 581,775 | 599,290 | |||||||||||||||
of which | ||||||||||||||||||||
Total consumption | 213,300 | 229,518 | 238,921 | 253,035 | 260,063 | |||||||||||||||
of which | ||||||||||||||||||||
Wages and salaries | 123,480 | 131,084 | 136,423 | 143,870 | 148,248 | |||||||||||||||
Cost of goods and services | 85,726 | 93,637 | 96,495 | 100,887 | 103,057 | |||||||||||||||
Interest expense | 75,333 | 79,570 | 72,547 | 69,275 | 68,434 | |||||||||||||||
Production grants | 13,903 | 14,670 | 13,641 | 14,194 | 14,471 | |||||||||||||||
Social services | 195,460 | 202,291 | 214,035 | 224,445 | 234,181 | |||||||||||||||
Other current expenditures | 14,662 | 15,745 | 18,188 | 20,826 | 22,141 | |||||||||||||||
Capital expenditures(2) | 30,542 | 53,440 | 48,651 | 58,420 | 55,562 | |||||||||||||||
Investments | 27,807 | 30,196 | 23,768 | 34,133 | 34,875 | |||||||||||||||
Investment grants | 14,143 | 17,662 | 19,031 | 19,043 | 17,638 | |||||||||||||||
Other capital expenditures | (11,408 | ) | 5,582 | 5,852 | 5,244 | 3,049 | ||||||||||||||
Total expenditures | 543,200 | 595,234 | 605,983 | 640,195 | 654,852 | |||||||||||||||
% of GDP | 46.6 | % | 48.8 | % | 48.1 | % | 49.2 | % | 48.5 | % | ||||||||||
Revenues | ||||||||||||||||||||
Current revenues | 529,290 | 553,091 | 565,934 | 574,959 | 598,193 | |||||||||||||||
of which | ||||||||||||||||||||
Tax revenues | 345,718 | 359,182 | 364,080 | 365,443 | 379,382 | |||||||||||||||
of which | ||||||||||||||||||||
Direct taxes | 170,547 | 182,690 | 178,964 | 178,098 | 184,175 | |||||||||||||||
Indirect taxes | 175,171 | 176,492 | 185,116 | 187,345 | 195,207 | |||||||||||||||
Social security contributions | 148,083 | 153,819 | 161,241 | 168,899 | 174,756 | |||||||||||||||
Revenues from capital | 5,617 | 7,686 | 7,673 | 7,704 | 8,319 | |||||||||||||||
Other current revenues | 29,872 | 32,404 | 32,940 | 32,913 | 35,736 | |||||||||||||||
Capital revenues | 5,110 | 3,402 | 5,586 | 23,481 | 13,007 | |||||||||||||||
Total revenues | 534,400 | 556,493 | 571,520 | 598,440 | 611,200 | |||||||||||||||
% of GDP | 45.8 | % | 45.7 | % | 45.3 | % | 46.0 | % | 45.2 | % | ||||||||||
Current surplus/(deficit) | 16,632 | 11,297 | 8,602 | (6,816 | ) | (1,097 | ) | |||||||||||||
% of GDP | 1.4 | % | 0.9 | % | 0.7 | % | (0.5) | % | (0.1) | % | ||||||||||
Net borrowing | 8,800 | 38,741 | 34,463 | 41,755 | 43,652 | |||||||||||||||
% of GDP | 0.8 | % | 3.2 | % | 2.7 | % | 3.2 | % | 3.2 | % | ||||||||||
Primary balance | 66,533 | 40,829 | 38,084 | 27,520 | 24,782 | |||||||||||||||
% of GDP | 5.7 | % | 3.4 | % | 3.0 | % | 2.1 | % | 1.8 | % | ||||||||||
GDP (nominal value) | 1,166,548 | 1,218,535 | 1,260,598 | 1,300,929 | 1,351,328 |
(1) | The Statistical Office of the European Communities, or Eurostat, published in July 2002 a decision relating to the methods of accounting for securitizations. Pursuant to the Eurostat decision, Italy is required to account for receipts, aggregating approximately €6.7 billion, from certain real estate and state lottery proceeds securitization transactions, which took place |
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in 2001, in the three-year period 2002-2004 and not in 2001. The general government revenues and expenditures figures presented in the table above take into account the effects of the Eurostat decision. | ||
(2) | Includes revenues from UMTS licenses (deducted from capital expenditures) for the year 2000 (€ 13,815 million, or 1.2 per cent of GDP) and revenues from the disposal of state-owned real estate (deducted from capital expenditures) for the year 2001 (€ 1,600 million, or 0.2 per cent of GDP), 2002 (€ 10,800 million, or 0.9 per cent of GDP), 2003 (€ 2,700 million, or 0.2 per cent of GDP) and 2004 (€ 4.5 million, or 0.3 per cent of GDP). | |
Source: | Annual Report of the Bank of Italy (May 2005) for the year ended December 31, 2004. |
General government expenditures and revenues have increased in each of the last five years and are expected to increase in 2005. General government expenditures rose by 2.3 per cent in 2004, compared to 5.6 per cent in 2003. Lower expenditure growth in 2004 was principally due to lower interest expense and costs of goods and services, which accounted for 4.9 per cent of GDP in 2004 compared to 5.1 per cent in 2003 as well as lower capital expenditures, principally resulting from higher receipts from the disposal of state-owned real estate.
General government revenues increased by 2.1 per cent in 2004 compared to 4.7 per cent in 2003. Current revenues grew by 4.0% in 2004 compared to 1.6 per cent in 2003, primarily due to substantially higher growth in tax revenues than in 2003. The effect of higher revenue growth was offset by lower capital revenues, which were atypically high in 2003 due to a tax amnesty introduced in 2003.
Italy’s current account registered a steady declining surplus from 2000 through 2002 and a €6.8 billion deficit in 2003, principally attributable to a rise in wage and salaries and costs of goods and services, partially offset by a slight rise in tax receipts. Italy’s current account deficit decreased to €1.1 billion in 2004, principally due to the higher growth of tax receipts in 2004 than wage and salaries and costs of goods and services.
The following table sets forth the composition of tax revenues for each of the five fiscal years ended December 31, 2004 based on State sector (cash basis) accounting criteria. Direct and indirect tax revenues reflected in this table do not correspond to those shown in the ‘‘General Government Revenues and Expenditures’’ table set forth above, which is prepared on general Government (accrual basis) ESA95 accounting criteria as explained in further detail in footnote 1 to the table.
COMPOSITION OF TAX REVENUES
2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||
(millions of euro) | ||||||||||||||||||||
Direct taxes(1) | ||||||||||||||||||||
Personal income tax | 113,970 | 120,931 | 120,204 | 124,238 | 127,657 | |||||||||||||||
Corporate income tax | 28,622 | 32,521 | 29,651 | 29,022 | 28,063 | |||||||||||||||
Local income tax | 165 | 195 | 145 | 60 | 23 | |||||||||||||||
Investment income tax | 18,426 | 15,174 | 12,620 | 10,509 | 10,539 | |||||||||||||||
Other(2) | 3,774 | 8,739 | 7,693 | 13,770 | 15,715 | |||||||||||||||
Total direct taxes | 164,957 | 177,560 | 170,313 | 177,599 | 181,997 | |||||||||||||||
Indirect taxes(1) | ||||||||||||||||||||
VAT | 89,022 | 91,515 | 93,881 | 96,177 | 100,562 | |||||||||||||||
Other transaction-based taxes | 15,042 | 14,519 | 16,497 | 18,481 | 20,527 | |||||||||||||||
Production taxes | 26,532 | 25,936 | 26,034 | 27,456 | 26,214 | |||||||||||||||
Tax on State monopolies | 7,357 | 7,305 | 7,685 | 7,770 | 8,502 | |||||||||||||||
National Lottery | 8,887 | 7,722 | 8,858 | 6,839 | 14,657 | |||||||||||||||
Others | 678 | 637 | 638 | 3,774 | 1,855 | |||||||||||||||
Total indirect taxes | 147,518 | 147,634 | 153,593 | 160,497 | 172,317 | |||||||||||||||
Total taxes | 312,475 | 325,194 | 323,906 | 338,096 | 354,314 | |||||||||||||||
(1) | The data presented in this table does not correspond to the general Government direct and indirect tax revenue figures contained in the preceding table entitled “General Government Revenues and Expenditures”, primarily because this table is prepared on the basis of State sector (cash basis) accounting criteria while the “General Government Revenues and Expenditures” table is prepared on an accrual basis in accordance with ESA95. Generally, State sector accounting does not include indirect taxes levied by, and certain amounts allocable to, regional and other local governments and entities. However, because this table is prepared on a cash basis, it reflects tax receipts of entities that are excluded from State sector accounting (such as local government entities) that are collected on their behalf by the State (and subsequently transferred by the State to those entities). | |
(2) | The taxes classified as “other” are non-recurring and, accordingly, this item is highly variable. | |
Source: | Annual Report of the Bank of Italy (May 2005) for the year ended December 31, 2004. |
In 2004, direct taxes receipts increased by 2.5 per cent from € 177.6 billion in 2003 to € 182.0 billion in 2004, principally due to higher receipts from personal income taxes and non-recurring tax receipts. Indirect taxes include VAT, excise duties, stamp duties and other taxes levied on expenditures. Indirect tax receipts increased approximately 7.4 per cent from € 160.5 billion in 2003 to € 172.3 billion in 2004, mainly due to the increase in tax revenues derived from the national lottery and VAT receipts.
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The 2006-2009 Program Document
In July 2005 the Government finalized and presented to Parliament its 2006-2009 Program Document, which contemplates as its main objective achieving long-term economic growth. The following table sets forth information on Italy’s principal public finance forecasts for 2005 and targets for the years indicated, as well as the gross domestic product, inflation and unemployment assumptions underlying the Program Document.
2006-2009 PROGRAM DOCUMENT OBJECTIVES
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
(Forecast) | (Target) | |||||||||||||||||||
Primary balance, as a percentage of GDP | 0.6 | 0.9 | 1.8 | 2.5 | 3.0 | |||||||||||||||
Net borrowing, as a percentage of GDP | (4.3) | (3.8) | (2.8) | (2.1) | (1.5) | |||||||||||||||
Public debt, as a percentage of GDP | 108.2 | 107.4 | 105.2 | 103.6 | 100.9 | |||||||||||||||
GDP (% real growth rate) | 0.0 | 1.5 | 1.5 | 1.7 | 1.8 | |||||||||||||||
Inflation (% real growth) | N.A. | 1.7 | 1.7 | 1.6 | 1.6 | |||||||||||||||
Unemployment rate (%) | 8.1 | 8.1 | 7.5 | 7.4 | 7.3 | |||||||||||||||
Structural primary balance, as a percentage of GDP | 1.5 | 1.7 | 2.5 | 3.0 | 3.4 | |||||||||||||||
Structural net borrowing, as a percentage of GDP | (3.4) | (3.0) | (2.1) | (1.6) | (1.1) | |||||||||||||||
Structural net borrowing, net of one-off measures, as a percentage of GDP | (3.8) | (3.0) | (2.1) | (1.6) | (1.1) | |||||||||||||||
Structural primary balance, net of one-off measures, as a percentage of GDP | 1.1 | 1.7 | 2.5 | 3.0 | 3.4 |
Source: | 2006-2009 Program Document. The unemployment rate objectives for 2007, 2008 and 2009 have been revised to reflect the new objectives published in the Forecast and Planning Report for 2006 (Relazione Previsionale e Programmatica per il 2006). |
Because the Program Document is based on assumptions with respect to future economic developments, including international economic trends, there can be no assurance that its forecasts and objectives will be attained.
Public Debt—Total Treasury Issues
The following table shows the total of debt securities issued by the Treasury and outstanding as of the dates indicated. Total Treasury issues differ from Italy’s total public debt as the former do not include liabilities to holders of postal savings accounts, debt incurred by Ferrovie dello Stato S.p.A. and ANAS (Aziende Nationale per le Strade) and debt incurred by other State sector entities and other general government entities.
June 30, 2005 | September 30, 2005 | |||||||
(millions of euro) | ||||||||
Short term bonds (BOT) | 139,110 | 141,666 | ||||||
Medium and long term bonds (initially issued in Italy) | 1,037,139 | 1,016,088 | ||||||
External bonds (initially issued outside Italy(1)) | 89,680 | 90,017 | ||||||
Total Treasury issues | 1,265,929 | 1,247,771 | ||||||
(1) | Italy often enters into currency swap agreements in the ordinary course of the management of its debt. The total amount of external bonds shown above takes into account the effect of these arrangements. |
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The total amounts of external bonds shown above include outstanding debt under Italy’s €10 billion Commercial Paper program, with maturity of less than one year. All amounts of debt outstanding under Italy’s Commercial Paper Program are repaid in full every year by year-end. | ||
The amount of external bonds shown above is not directly comparable to the total amount of external bonds indicated in the table “External Bonds of the Treasury as of September 30, 2005” below, which does not take into account (i) the effect of currency swaps and (ii) the amount of debt outstanding under Italy’s Commercial Paper Program. | ||
Source: Ministry of Economy and Finance |
The following table shows the external bonds of the Treasury issued and outstanding as of September 30, 2005.
EXTERNAL BONDS OF THE TREASURY
AS OF SEPTEMBER 30, 2005
AS OF SEPTEMBER 30, 2005
Initial Public | �� | Original Principal | Principal Amount | |||||||||||||||||||||||
Title | Interest Rate(%) | Offering Price | Date of Issue | Maturity Date | Amount | Outstanding | Equivalent in euro | |||||||||||||||||||
US$(1) | ||||||||||||||||||||||||||
$3,500,000,000 | 6.875% | 98.725 | % | September 27, 1993 | September 27, 2023 | 3,500,000,000 | 3,500,000,000 | 2,906,493,938 | ||||||||||||||||||
$1,500,000,000 | 6.025%-6.88% | 100.000 | % | March 5, 1996 | Mar 5, 2004/12 | 1,500,000,000 | 1,500,000,000 | 1,245,640,259 | ||||||||||||||||||
$750,000,000 | 5.81%-6.70% | 100.000 | % | March 5, 1996 | Mar 5, 2002/10 | 750,000,000 | 750,000,000 | 622,820,130 | ||||||||||||||||||
$1,500,000,000 | 5.97%-6.25% | 100.000 | % | December 20, 1996 | Dec 20, 2004/12 | 1,500,000,000 | 1,500,000,000 | 1,245,640,259 | ||||||||||||||||||
$2,500,000,000 | 6.000% | 99.755 | % | May 29, 1998 | May 29, 2008 | 2,500,000,000 | 2,500,000,000 | 2,076,067,098 | ||||||||||||||||||
$2,000,000,000 | 6.000% | 99.274 | % | February 22, 2001 | February 22, 2011 | 2,000,000,000 | 2,000,000,000 | 1,660,853,679 | ||||||||||||||||||
$2,000,000,000 | 5.250% | 99.506 | % | April 5, 2001 | April 5, 2006 | 2,000,000,000 | 2,000,000,000 | 1,660,853,679 | ||||||||||||||||||
$3,000,000,000 | 4.375% | 99.468 | % | October 25, 2001 | October 25, 2006 | 3,000,000,000 | 3,000,000,000 | 2,491,280,518 | ||||||||||||||||||
$2,000,000,000 | 4.375% | 98.007 | % | January 28, 2002 | October 25, 2006 | 2,000,000,000 | 2,000,000,000 | 1,660,853,679 | ||||||||||||||||||
$2,000,000,000 | 5.625% | 99.893 | % | March 1, 2002 | June 15, 2012 | 2,000,000,000 | 2,000,000,000 | 1,660,853,679 | ||||||||||||||||||
$1,000,000,000 | 5.625% | 99.392 | % | May 8, 2002 | June 15, 2012 | 1,000,000,000 | 1,000,000,000 | 830,426,839 | ||||||||||||||||||
$300,000,000 | 3 mth libor - 0.065% | 100.000 | % | August 1, 2002 | August 1, 2007 | 300,000,000 | 300,000,000 | 249,128,052 | ||||||||||||||||||
$3,000,000,000 | 3.625% | 99.721 | % | September 4, 2002 | September 4, 2007 | 3,000,000,000 | 3,000,000,000 | 2,491,280,518 | ||||||||||||||||||
$3,000,000,000 | 2.500% | 99.767 | % | January 30, 2003 | March 31, 2006 | 3,000,000,000 | 3,000,000,000 | 2,491,280,518 | ||||||||||||||||||
$2,000,000,000 | 5.375% | 98.436 | % | February 27, 2003 | June 15, 2033 | 2,000,000,000 | 2,000,000,000 | 1,660,853,679 | ||||||||||||||||||
$2,000,000,000 | 4.375% | 99.694 | % | February 27, 2003 | June 15, 2013 | 2,000,000,000 | 2,000,000,000 | 1,660,853,679 | ||||||||||||||||||
$1,250,000,000 | 3.25% | 99.949 | % | May 6, 2003 | May 6, 2008 | 1,250,000,000 | 1,250,000,000 | 1,038,033,549 | ||||||||||||||||||
$2,000,000,000 | 99.52% | 99.521 | % | July 3, 2003 | July 15, 2008 | 2,000,000,000 | 2,000,000,000 | 1,660,853,679 | ||||||||||||||||||
$3,000,000,000 | 2.75% | 99.901 | % | November 13, 2003 | December 15, 2006 | 3,000,000,000 | 3,000,000,000 | 2,491,280,518 | ||||||||||||||||||
$100,000,000 | 4.17% | 100.000 | % | November 14, 2003 | November 15, 2010 | 100,000,000 | 100,000,000 | 83,042,684 | ||||||||||||||||||
$100,000,000 | 4.06% | 100.000 | % | December 9, 2003 | December 9, 2010 | 100,000,000 | 100,000,000 | 83,042,684 | ||||||||||||||||||
$2,000,000,000 | 2.75% | 100.239 | % | January 14, 2004 | December 15, 2006 | 2,000,000,000 | 2,000,000,000 | 1,660,853,679 | ||||||||||||||||||
$2,000,000,000 | 3.25% | 99.515 | % | March 3, 2004 | May 15, 2009 | 2,000,000,000 | 2,000,000,000 | 1,660,853,679 | ||||||||||||||||||
$2,000,000,000 | 3.75% | 99.783 | % | June 30, 2004 | December 14, 2007 | 2,000,000,000 | 2,000,000,000 | 1,660,853,679 | ||||||||||||||||||
$4,000,000,000 | 4.50% | 99.411 | % | January 21, 2005 | January 21, 2015 | 4,000,000,000 | 4,000,000,000 | 3,321,707,358 | ||||||||||||||||||
$3,000,000,000 | 4.00% | 99.932 | % | May 9, 2005 | June 16, 2008 | 3,000,000,000 | 3,000,000,000 | 2,491,280,518 | ||||||||||||||||||
Euro(2) | ||||||||||||||||||||||||||
1,000,000,000 | 3 mth libor - 0.06% | 100.000 | % | October 30, 1990 | October 30, 2005 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | ||||||||||||||||||
2,500,000,000 | 9.250% | 98.160 | % | March 7, 1991 | March 7, 2011 | 2,500,000,000 | 2,500,000,000 | 2,500,000,000 | ||||||||||||||||||
1,022,583,762 | 3 mth libor + 0.0625% | 99.887 | % | December 11, 1995 | December 20, 2002/10 | 1,022,583,762 | 1,022,583,762 | 1,022,583,762 | ||||||||||||||||||
567,225,000 | 6.250% | 100.790 | % | May 29, 1997 | May 29, 2012 | 567,225,000 | 567,225,000 | 567,225,000 | ||||||||||||||||||
762,245,000 | 5.875% | 101.594 | % | July 2, 1997 | July 2, 2007 | 762,245,000 | 762,245,000 | 762,245,000 | ||||||||||||||||||
1,533,870,000 | 5.750% | 101.663 | % | July 10, 1997 | July 10, 2007 | 1,533,870,000 | 1,533,870,000 | 1,533,870,000 | ||||||||||||||||||
60,000,000 | FRN/FX | 99.610 | % | October 8, 1998 | October 8, 2018 | 60,000,000 | 60,000,000 | 60,000,000 |
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Initial Public | Original Principal | Principal Amount | ||||||||||||||||||||||||
Title | Interest Rate(%) | Offering Price | Date of Issue | Maturity Date | Amount | Outstanding | Equivalent in euro | |||||||||||||||||||
300,000,000 | Index linked | 101.425 | % | October 15, 1998 | October 15, 2018 | 300,000,000 | 300,000,000 | 300,000,000 | ||||||||||||||||||
1,000,000,000 | 4.000% | 99.342 | % | October 26, 1998 | October 26, 2005 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | ||||||||||||||||||
1,000,000,000 | CMS | 99.950 | % | May 6, 1999 | May 6, 2019 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | ||||||||||||||||||
1,000,000,000 | CMS | 101.600 | % | June 28, 1999 | June 28, 2029 | 1,000,000,000 | 905,000,000 | 905,000,000 | ||||||||||||||||||
1,000,000,000 | CMS | 100.750 | % | August 30, 1999 | August 30, 2019 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | ||||||||||||||||||
2,000,000,000 | 4.750% | 99.706 | % | January 23, 2001 | January 23, 2006 | 2,000,000,000 | 2,000,000,000 | 2,000,000,000 | ||||||||||||||||||
150,000,000 | Zero Coupon | 100.000 | % | February 20, 2001 | February 20, 2031 | 150,000,000 | 150,000,000 | 150,000,000 | ||||||||||||||||||
3,000,000,000 | 5.750% | 100.040 | % | July 25, 2001 | July 25, 2016 | 3,000,000,000 | 3,000,000,000 | 3,000,000,000 | ||||||||||||||||||
400,000,000 | 3 mth libor - 0.06% | 100.000 | % | January 22, 2002 | January 22, 2012 | 400,000,000 | 400,000,000 | 400,000,000 | ||||||||||||||||||
1,000,000,000 | 3 mth eubor - 0.06% | 100.000 | % | July 24, 2003 | January 24, 2007 | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | ||||||||||||||||||
150,000,000 | 84.5% cms 10Y | 100.000 | % | April 26, 2004 | April 26, 2019 | 150,000,000 | 150,000,000 | 150,000,000 | ||||||||||||||||||
300,000,000 | 12 mth eubor + 0.10% | 100.000 | % | May 31, 2005 | May 31, 2035 | 300,000,000 | 300,000,000 | 300,000,000 | ||||||||||||||||||
720,000,000 | 3.546% until 2009 | 100.000 | % | June 2, 2005 | June 2, 2029 | 720,000,000 | 720,000,000 | 720,000,000 | ||||||||||||||||||
395,000,000 | 3.523% until 2010 | 100.000 | % | June 2, 2005 | June 2, 2030 | 395,000,000 | 395,000,000 | 395,000,000 | ||||||||||||||||||
200,000,000 | 85% * 10y Eurswap | 100.000 | % | June 8, 2005 | June 8, 2020 | 200,000,000 | 200,000,000 | 200,000,000 | ||||||||||||||||||
2,500,000,000 | 85% * 10y swap rate | 100.000 | % | June 15, 2005 | June 15, 2020 | 2,500,000,000 | 2,500,000,000 | 2,500,000,000 | ||||||||||||||||||
300,000,000 | 85.5% * 10y swap rate | 100.000 | % | June 28, 2005 | June 28, 2021 | 300,000,000 | 300,000,000 | 300,000,000 | ||||||||||||||||||
Swiss Francs(3) | ||||||||||||||||||||||||||
ChF 300,000,000 | Zero Coupon | 30.873 | % | December 11, 1985 | December 11, 2005 | 300,000,000 | 300,000,000 | 192,789,666 | ||||||||||||||||||
ChF 1,000,000,000 | 3.500% | 102.900 | % | September 25, 1998 | September 25, 2008 | 1,000,000,000 | 1,000,000,000 | 642,632,222 | ||||||||||||||||||
ChF 1,500,000,000 | 3.125% | 99.825 | % | Jan 15,1999 | July 15, 2010 | 1,500,000,000 | 1,500,000,000 | 963,948,332 | ||||||||||||||||||
ChF 1,000,000,000 | 3.625% | 100.820 | % | January 10, 2001 | January 10, 2006 | 1,000,000,000 | 1,000,000,000 | 642,632,222 | ||||||||||||||||||
ChF 1,000,000,000 | 3.000% | 100.180 | % | February 11, 2002 | August 11, 2006 | 1,000,000,000 | 1,000,000,000 | 642,632,222 | ||||||||||||||||||
ChF 1,000,000,000 | 2.000% | 100.470 | % | January 30, 2003 | April 30, 2009 | 1,000,000,000 | 1,000,000,000 | 642,632,222 | ||||||||||||||||||
ChF 1,000,000,000 | 2.000% | 99.775 | % | August 11, 2003 | February 9, 2007 | 1,000,000,000 | 1,000,000,000 | 642,632,222 | ||||||||||||||||||
ChF 1,000,000,000 | 1.750% | 100.09 | % | February 3, 2004 | March 3, 2008 | 1,000,000,000 | 1,000,000,000 | 642,632,222 | ||||||||||||||||||
ChF 1,000,000,000 | 2.750% | 100.625 | % | July 1, 2004 | July 1, 2011 | 1,000,000,000 | 1,000,000,000 | 642,632,222 | ||||||||||||||||||
ChF 2,000,000,000 | 2.500% | 100.090 | % | February 2, 2005 | March 2, 2015 | 2,000,000,000 | 2,000,000,000 | 1,285,264,443 | ||||||||||||||||||
Pounds Sterling(4) | ||||||||||||||||||||||||||
£400,000,000 | 10.500% | 100.875 | % | April 28, 1989 | April 30, 2014 | 400,000,000 | 400,000,000 | 586,553,266 | ||||||||||||||||||
£1,500,000,000 | 6.000% | 98.565 | % | August 4, 1998 | August 4, 2028 | 1,500,000,000 | 1,500,000,000 | 2,199,574,749 | ||||||||||||||||||
£600,000,000 | 3 mth libor - 0.15% | 100.000 | % | March 5, 2003 | March 5, 2008 | 600,000,000 | 600,000,000 | 879,829,900 | ||||||||||||||||||
£250,000,000 | 5.25% | 99.476 | % | July 29, 2004 | December 7, 2034 | 250,000,000 | 250,000,000 | 366,595,791 | ||||||||||||||||||
Norwegian Kroners(5) | ||||||||||||||||||||||||||
NOK 2,000,000,000 | 6.150% | 100.000 | % | September 25, 2002 | September 25, 2012 | 2,000,000,000 | 2,000,000,000 | 253,903,770 | ||||||||||||||||||
NOK 2,000,000,000 | 4.340% | 100.000 | % | June 23, 2003 | June 23, 2015 | 2,000,000,000 | 2,000,000,000 | 253,903,770 | ||||||||||||||||||
Japanese Yen(6) | ||||||||||||||||||||||||||
¥125,000,000,000 | 5.500% | 100.000 | % | December 15, 1994 | December 15, 2014 | 125,000,000,000 | 125,000,000,000 | 917,431,193 | ||||||||||||||||||
¥125,000,000,000 | 4.500% | 100.000 | % | June 8, 1995 | June 8, 2015 | 125,000,000,000 | 125,000,000,000 | 917,431,193 | ||||||||||||||||||
¥150,000,000,000 | 3.800% | 100.000 | % | April 4, 1996 | March 27, 2008 | 150,000,000,000 | 150,000,000,000 | 1,100,917,431 | ||||||||||||||||||
¥100,000,000,000 | 3.700% | 100.000 | % | November 14, 1996 | November 14, 2016 | 100,000,000,000 | 100,000,000,000 | 733,944,954 | ||||||||||||||||||
¥100,000,000,000 | 3.45%e | 99.800 | % | March 24, 1997 | March 24, 2017 | 100,000,000,000 | 100,000,000,000 | 733,944,954 | ||||||||||||||||||
¥100,000,000,000 | 1.800% | 99.882 | % | February 23, 2000 | February 23, 2010 | 100,000,000,000 | 100,000,000,000 | 733,944,954 | ||||||||||||||||||
¥100,000,000,000 | 0.375% | 99.936 | % | October 10, 2001 | October 10, 2006 | 100,000,000,000 | 100,000,000,000 | 733,944,954 | ||||||||||||||||||
¥100,000,000,000 | 0.375% | 99.800 | % | April 2, 2002 | October 10, 2006 | 100,000,000,000 | 100,000,000,000 | 733,944,954 | ||||||||||||||||||
¥100,000,000,000 | 0.650% | 99.995 | % | April 14, 2004 | March 20, 2009 | 100,000,000,000 | 100,000,000,000 | 733,944,954 |
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Initial Public | Original Principal | Principal Amount | ||||||||||||||||||||||||
Title | Interest Rate(%) | Offering Price | Date of Issue | Maturity Date | Amount | Outstanding | Equivalent in euro | |||||||||||||||||||
Australian Dollar(7) | ||||||||||||||||||||||||||
A$1,000,000,000 | 5.880% | 99.803 | % | February 27, 2004 | August 14, 2008 | 1,000,000,000 | 1,000,000,000 | 631,791,761 | ||||||||||||||||||
TOTAL OUTSTANDING | 84,984,936,534 | (8) | ||||||||||||||||||||||||
(1) | U.S. dollar amounts have been converted into euro at $1.2042/€1.00, the exchange rate prevailing at September 30, 2005. | |
(2) | External debt denominated in currencies of countries that have adopted the euro have been converted into euro at the fixed rate at which those currencies where converted into euro upon their issuing countries becoming members of the European Monetary Union. | |
(3) | Swiss Franc amounts have been converted into euro at ChF1.5561/€1.00, the exchange rate prevailing at September 30, 2005. | |
(4) | Pounds Sterling amounts have been converted into euro at £0.68195/€1.00, the exchange rate prevailing at September 30, 2005. | |
(5) | Norwegian Kroner amounts have been converted into euro at NOK7.877/€1.00, the exchange rate prevailing at September 30, 2005. | |
(6) | Japanese Yen amounts have been converted into euro at ¥136.25/€1.00, the exchange rate prevailing at September 30, 2005. | |
(7) | Australian Dollar amounts have been converted into euro at A$1.5828/€1.00, the exchange rate prevailing at September 30, 2005. | |
(8) | The amount of external bonds shown above does not take into account (i) approximately US$325 million outstanding under Italy’s Commercial Paper Program and (ii) the effect of currency swaps that Italy often enters into in the ordinary course of the management of its debt. The following table summarizes the effects on the Treasury’s external bonds after giving effect to currency swaps. |
As of September 30, 2005 | ||||||||
Currency | Before Swap | After Swap | ||||||
US Dollars | 50.32 | % | 6.48 | % | ||||
Euro | 26.79 | % | 72.29 | % | ||||
Swiss Francs | 8.17 | % | 8.79 | % | ||||
Pounds Sterling | 4.75 | % | 3.38 | % | ||||
Norwegian Kroner | 0.60 | % | — | |||||
Japanese Yen | 8.64 | % | 9.06 | % | ||||
Australian Dollar | 0.74 | % | — | |||||
Total External Bonds (in millions of Euro) | €84,985 | €89,765 |
Source: | Ministry of Economy and Finance |
Other Developments
In November 2003, the Regional Tax Court of Cremona (Commissione Tributaria Provinciale di Cremona) instituted a proceeding before the European Court of Justice (ECJ), referred to as the IRAP case, requesting that the ECJ issue a preliminary ruling in the case of Banca Popolare di Cremona Soc. Coop.a.r.l. v. Agenzia Entrate Ufficio di Cremona on the question of whether Italy’s regional tax on production (Imposta Regionale sulle Attivitá Produttive or IRAP) is incompatible with the EU’s prohibition of national turnover taxes other than VAT. IRAP was introduced in 1998 in connection with Italy’s regional devolution program. IRAP receipts are reflected in indirect taxes in the “General Government and Revenues” table set forth above and totaled €31.3 billion, €32.8 billion and €32.3 billion in 2002, 2003 and 2004, respectively. They are collected by the Italian government on behalf of Italy’s regions and they represent one of the principal sources of funding of regional expenditures. In March 2005, the EU advocate general opined before the ECJ that IRAP possessed the essential features of VAT and therefore should be ruled to be incompatible with VAT. Italy’s position is that IRAP does not violate the EU’s prohibition on national turnover taxes other than VAT. The ECJ has not yet delivered its preliminary ruling on the IRAP case. If the ECJ ruled that IRAP is incompatible with EU law, the Italian Government estimates that the retroactive entitlement to reimbursement would be in excess of €120 billion. Accordingly, in order to avoid material adverse effects on Italy’s regional finances, the EU Advocate General requested that the ECJ limit the effects of its ruling from a temporal standpoint by reference to a fixed date.
In September 2005, securities litigation was commenced against Italy and a number of investment banking firms in the U.S. District Court for the Southern District of New York. This litigation, which seeks class action status, alleges that the registration statements filed by Italy with the U.S. Securities and Exchange Commission and used by Italy in connection with its issuance of $25 billion of debt securities between September 2002 and April 2005 contained certain misrepresentations and omissions relating to the size of Italy’s historical budget deficits and the amount of Italy’s debt as a percentage of gross national product. In this action, the plaintiff seeks an unspecified amount of compensatory damages, plus costs and fees. Italy believes that it has valid defenses to these claims and intends to defend this action vigorously. Because litigation is subject to many uncertainties, it is not feasible for Italy to predict the outcome of this lawsuit. However, Italy does not expect that this matter will have a material effect on its financial position.
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