By Judith Ugwumadu | 20 February 2015

Italy must push ahead with reforms to improve the value for money of public spending in order to boost growth, the Organisation for Economic Cooperation and Development has said.

In its latest economic survey of the country, the economic think-tank called for action to boost public sector transparency and for effective action on corruption, with changes to Italy’s political and institutional systems ‘crucial’ to the success of deeper reforms to boost growth.

Among its proposed reforms was a need for changes to the taxation regime to include reassessing the wide array of special tax rates and exemptions.

The government should also take action to encourage competition into local public services, while action was also needed to improve the skills of the population, which often do not match the jobs available.

‘Alongside improving prospects for growth, Italy has made major efforts to reduce its deficit with the result that the debt burden should begin to decline next year,’ it stated.

‘Fiscal plans need to be followed through and a tight rein kept on expenditure. Tax reform should include reassessing the wide array of special tax rates and exemptions.’

Economic growth in the country has been flat in the last three quarters of 2014, but OECD secretary general Angel Gurría forecast gross domestic product expansion of 0.6% in 2015, accelerating to 1.3% in 2016.

Last week the think-tank called on all governments not to slow the pace of policy reforms needed to boost growth, as any slowdown in the ‘pace and breath’ of structural reforms presented a risk to economic growth.