Although the debt to GDP ratio continued to fall, the pace of fiscal consolidation slowed considerably in Italy in 2001 and 2002 (Figure 13). After rising from 1.8 per cent of GDP in 2000 to 2.7 per cent in 2001, a slight narrowing, to 2.5 per cent of GDP was registered for the budget deficit in 2002 in spite of the marked economic slowdown. The narrowing reflected the effects of a number of measures such as tighter controls on central government spending, enlargement of the business tax base and a strengthened health spending agreement with the regions. Recourse to one-off measures, particularly the sale of public-owned real assets and proceeds from securitisation (cartolarizzazioni) helped to contain the deficits in a period of marked cyclical slowdown. Nevertheless, there is also an underlying excessive debt problem, and addressing it will require measures of a more permanent nature in future. Thus, the fiscal consolidation process and the achievement and maintenance of the medium-term balanced budget targets may require additional measures...