The European Commission said
Friday that Italy is at risk of not respecting the EU's
Stability and Growth Pact with its 2015 budget, and said it
would "assess the situation at the start of March 2015".
It said it would also re-assess the situations in France
and Belgium following "the approval of the budget laws and the
specific provisions of the programs of structural reforms" that
the three countries have committed to "at the highest levels".
The EC added that Rome had to "adopt the necessary measures
to guarantee that the budget conforms to the Pact".
The announcement that the EC was not giving a negative
verdict on the budget plan, even though that plan delays action
towards balancing the budget in structural terms, was widely
expected.
This is because Premier Matteo Renzi's government has
argued that the current situation is exceptional as, after years
of recession and austerity, Italy cannot risk prolonging the
downturn further with more budget consolidation.
The executive has also argued that it is working hard to
push through structural economic reforms that will deliver
growth in the medium and long term.
The EC recognised that Italy has made "some progress" on
its recommendations to put the country's economic and financial
house in order, but said Rome needed to do more to reduce its
massive public debt of over two trillion euros.
To do this, the EC said, it is necessary to introduce
"policies to increase growth, keeping primary spending under
tight control by increasing the efficiency of public spending"
and pressing ahead with a privatization programme.
"The EU will say that there are exceptionally negative
circumstances in terms of the country's deep recession, but also
positive ones in terms of the agenda of structural reforms,"
Economy Minister Pier Carlo Padoan had said earlier.
"This means that a country with a high debt level has the
chance to kick start a virtuous mechanism".
Also on Friday, European Economic and Monetary Affairs
Commissioner Pierre Moscovici said that Italy must make an extra
effort with its 2015 budget law to satisfy the EU.
"The budget is not yet fully compatible with the rules of
the (Stability and Growth) Pact," Moscovici said. "That's why we
are asking for Italy to make a little extra effort...when you
look at the debt level, there's a strong need for this".
The Renzi government recently said it was putting off
balancing the budget in structural terms until 2017. However, it
did change its 2015 budget law to increase the reduction in the
structural deficit to 0.3% next year from the originally planned
0.1% in order to win approval from the European Commission.
Italy's economy ministry hailed what it said was a
"positive appraisal" by the European Commission.
"No infraction procedure is in the offing. However, the
Commission saw a risk of non-compliance with Stability and
Growth Pact rules, and will assess progress made in March," the
ministry said.
The government will forge ahead with reforms "with courage
and determination" to make Italy competitive once more,
including "via privatizations," the ministry added.
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