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EU accuses Italy of missing debt targets

'Reduction rhythm off the mark' says Rehn

03 December, 10:30
EU accuses Italy of missing debt targets (ANSA) - Rome, December 3 - The European Union on Tuesday accused Italy of not respecting debt-reduction targets. "Italy must respect a certain debt-reduction rhythm, and it's not doing that. In order to do that, the effort of structural adjustment should have been equal to half a percentage point of gross domestic product (GDP). Instead, it's only 0.1%," said European Economic and Monetary Affairs Commissioner Olli Rehn in an interview with Italian daily La Repubblica. At more than 130% of GDP, Italy's public debt is second in the eurozone only to Greece's.

According to the Organization for Economic Development, Italy is successfully reducing its budget deficit but failing to reduce its public debt.

Last month the OECD forecast Italy's deficit-to-GDP ratio at 3% for 2013, 2.8% for 2014 and 2% in 2015.

"As far as the deficit is concerned," added Rehn, "Italy is on the right path". But the European Commission is not equally convinced about Italy's massive debt. Last month it said that the Italian government's 2014 budget bill, currently wending its way through parliament, puts Italy in danger of not respecting the rules contained in the European Union's Stability and Growth Pact (SGP).

The government replied that the EC assessment did not take into account proceeds from planned asset sales and public-sector spending cuts. "I recognize the good intentions of the government," said Rehn. "But I have the precise duty to remain sceptical until there is proof of the contrary, especially regarding revenue from privitizations and their effects on the 2014 budget".