ROME: Moody's said on Friday that Italy's inability to take advantage of the available EU resources to boost its economy's growth potential would likely exert downward pressure on its credit rating.

The ratings agency added that while early elections in Italy are unlikely, the weakened government led by Prime Minister Giuseppe Conte "faces daunting policy challenges both in managing the current phase of the pandemic and ensuring the effective and timely absorption of EU recovery funds".

Conte scraped through a confidence vote last week after coalition partner and former prime minister Matteo Renzi triggered a crisis by quitting the ruling majority.

In November Moody's affirmed Italy's sovereign credit rating at "Baa3".