Economy Minister Pier Carlo
Padoan on Tuesday denied suggestions that Italy was violating
European Commission budget rules and said the country was making
every effort to reduce its massive debt.
"I know there is the perception that Italy is breaking the
rules but look carefully at the figures, it's not true," Padoan
said in an appearance before the European Parliament.
"We stick to the rules better than others despite the high
debt, which we are making every effort to keep on a path of
reduction," he added.
Italy is also introducing structural reforms "to strengthen
sustainability" of economic growth.
Padoan's comments came in an indirect response to an
earlier declaration by his German counterpart Wolfgang
Schaeuble on whether the EC should apply flexibility in
assessing the annual budgets of member States.
"Flexibility is not negative per se but it must not lead to
a situation where the agreed rules are not respected," Schaeuble
said.
"Then it would be wrong and would destroy confidence," of
financial markets in the sustainability of eurozone budgets, the
German economy minister added.
Italy has been heartened by suggestions from the EC that it
will apply some additional flexibility in assessing certain
kinds of stimulative spending in relation to budget deficits.
But that has triggered concerns that excessive flexibility
could not only undermine EU credibility but make it easy for
spendthrift countries to avoid improving their own economic
situations.
Valdis Dombrovskis, EC vice-president, warned that Italy
won't seem much advantage from flexibility for because the
country's deficit-to-GDP ratio is already very close to the EU
threshold of 3%.
"Probably this will be one of the limiting factors in the
case of Italy," Dombrovskis said.
Italy's situation should improve more than expected this
year as GDP growth will be "significantly higher than the latest
forecast," thanks to the European Central Bank's new
quantitative easing program, a senior Bank of Italy official
said Tuesday.
Deputy Director General Fabio Panetta said his central bank
had previously forecast GDP growth of 0.4% this year and 1.2% in
2016.
He added that the ECB's massive bond-purchase program
announced last week will have even greater impact if coupled
with economic and institutional reforms, in Italy as well as
across the eurozone.
EC officials "appreciate" the reform efforts Italy is
making to improve its economy and encourage growth, Padoan told
the European Parliament.
Talks with EC officials examining Italy's 2015 budget show
they also understand "the exceptional circumstances" created by
years of economic weakness, Padoan said.
Italy has not seen any real growth since 2008 while
unemployment and business failures have increased and inflation
fallen at times below zero.
Still, Padoan predicted that times will get better and
economic growth will help Italy to pay down its massive debt of
more than two trillion euros - more than 130% of GDP - beginning
next year.
"We respect the rules, we are one of the EU countries that
doesn't go over the (budget) limits," Padoan told Sky news.
"From 2016, the debt will be on a downward path,
guaranteeing stability".
The EC last year deferred a decision on whether to approve
Italy's 2015 budget until March, expressing concerns about the
lack of debt-reduction measures.
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