(see related stories on Tria).
Bank of Italy Deputy Director
General Federico Signorini warned Friday that an expansive
fiscal policy was risky.
"Although useful in adverse phases of the (economic) cycle,
an expansive budget policy does not guarantee growth in the
medium term and could endanger it in the long term," Signorini
told a joint hearing of the House and Senate budget committees
on the government's budget package for 2019.
He said the government's growth targets, which it hopes to
achieve with the help of an expansive budget featuring a deficit
of 2.4% of GDP next year, were "ambitious".
The government forecasts Italy's GDP will grow 1.5% next year
and 1.6% the year after.
"The expansive impact foreseen by the government appears
high," Signorini said.
He also said that the positive impact of the government's
fiscal policy risked being undone by rises in the yields on
Italy's State bonds.
He said that the sharp recent increases in the spread between
Italian and German bonds "has already cost the taxpayer almost
1.5 billion euros in (extra) interest over the last six months".
He said the cost of servicing the national debt could go up
to over five billion euros in 2019 and around nine billion in
2020 "if the rates should stay consistent with the current
market expectations".
"The growth in interest rates on the public debt has an
effect that in some way is comparable with tightening monetary
policy," he added, "risking to frustrate the whole of the
expansive impulse from the budget policy".
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