...The Region of Calabria continues to benefit from public sector support, with state and EU subsidies covering about 50% of operating costs and 60% of yearly investments, respectively, leading to a low correlation of revenue with local economic performance. Over the medium term Calabria's credit profile might be affected by the upcoming fiscal federalism, which aims to phase in a stronger link between revenue and local GDP. Although national subsidies should continue to fully complement regional direct revenue devolved to basic functions, such as healthcare, the region's low fiscal capacity may result in lower revenue for other functions, such as transport and economic development, leading to weaker budgetary performance and eventually a higher debt burden....
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