EU tells Italy to correct deficit
Measures must be adopted by mid-2010
09 November, 18:35
(ANSA) - Brussels, November 9 - The European
Commission is expected to formally tell Italy on Wednesday that
it must bring its budget deficit below 3% of GDP by mid-2012,
ANSA learned from sources at the European Union executive on
Monday.The formal letter is said to have set a deadline of June 2, 2010 for Italy to adopt "efficient budget measures" and other actions to reduce its deficit.
A month ago the EC said it had opened procedures against Italy and eight other European Union countries for adopting budgets with excessive deficits.
The EC explained that it opened an excessive deficit procedure (EDP) against Italy because its planned deficit for 2009 was not only over 3% ceiling set by the Euro Stability and Growth Pact (SGP) but was also neither exceptional nor temporary in nature.
According to the EU executive, Italy is facing deficits of 5.3% this year and next and 5.1% in 2011.
The other eight members cited for excessive deficits were: - Austria, Belgium, Czech Republic, Germany, the Netherlands, Portugal, Slovakia and Slovenia.
At the same time, however, the EC said that only seven of the EU's 27 members had budgets with deficits below the 3%.
Earlier this year the EC opened EDPs against nine members which had excessive deficits already in 2008: France, Greece, Ireland, Latvia, Spain, Lithuania, Malta, Poland and Romania.
In its letter on Wednesday, the EC will also tell Italy it must move to reduce its massive public debt, the third-largest in the world after the United States and Japan.
Current EC predictions are for Italy's debt to rise to 114.6% of GDP this year, 116.7% in 2010 and 117.8% in 2011.
The SGP limit for EU debts is 60% of GDP.
Despite its deficit and debt problems, the prospects for the Italian economy have improved and the EC last Tuesday issued a new forecast which predicted ''moderate growth'' for the country next year and in 2011.
This was followed on Friday by a report from the Organization for Economic Cooperation and Development (OECD) which said that Italy's economy in September showed the strongest signs of recovery in the 30-nation group for the second month in a row.
Given this trend, the OECD defined Italian economy as ''in expansion''.
