European Central Bank (ECB)
Governor Mario Draghi said Friday that the highly indebted EU
States must follow the Stability and Growth Pact.
The government of Italy, which has a debt of over two
trillion euros, has proposed letting its budget deficit rise to
2.4% of GDP next year.
The European Commission has expressed concern that this plan
could lead Italy to breach the rules of the Stability Pact.
"In the euro area, in order to reap the full benefits of our
monetary policy measures, other policy areas must contribute
more decisively to raising the longer-term growth potential and
reducing vulnerabilities," Draghi told the meeting of the
International Monetary and Financial Committee, in Bali,
Indonesia).
"The implementation of structural reforms needs to be
substantially stepped up.
"The ongoing broad-based expansion also calls for fiscal
buffers to be rebuilt.
"This is particularly important in countries where government
debt is high and for which full adherence to the Stability and
Growth Pact is critical for safeguarding sound fiscal positions.
"The transparent and consistent implementation of the EU's
fiscal and economic governance framework, over time and across
countries, remains essential".
On Thursday Reuters reported that several top ECB sources had
said the central bank would not come to Italy's rescue if the
governments or the bank sector run out of cash unless Rome
agrees a bailout from the European Union.
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