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Padoan sworn in as economy industry

Ex-OECD chief economist faces tough task

24 February, 13:26
Padoan sworn in as economy industry (ANSA) - Rome, February 24 - Former Organisation for Economic Cooperation and Development (OECD) chief economist Pier Carlo Padoan was sworn in Monday to the key post of economy minister in Matteo Renzi's new Italian government.

He missed Saturday's swearing-in of Italy's youngest premier and youngest government because he was at a G-20 meeting in Sydney.

Padoan, 64, is by far the oldest and most experienced cabinet member and on his own raised its average age to 47.

A former economics professor in Rome, he has also worked as consultant for the International Monetary Fund, the World Bank and the European Commission.

Padoan will be expected to use his international credibility to reassure markets and Italy's partners while mixing tax cuts with fiscal discipline to help lift fully out of its deepest postwar recession.

European Economic Commissioner Olli Rehn, a watchdog of the 3% budget-to-GDP limit imposed by EU treaties, has already hailed Padoan's appointment, saying "he knows what to do".

A loosening of the 3% limit to allow for stimulus spending for an economy which showed 0.1% growth last quarter after a two-year slump has been mooted, although Cabinet Secretary Graziano Delrio ruled this out Sunday.

Padoan, a past critic of inflicting austerity policies on struggling countries, has often stressed that "the taxes that hurt growth the least are those on property". Another well-known quote is "Italy is like a car accelerating at great speed with the hand-brake on." Many are looking to him to lift that brake by cutting labour costs, lowering taxes rates on the middle and lower classes and revising a plethora of industrial incentives that have proved too complicated and ineffective.

He is also expected to work closely with spending-cut czar Carlo Cottarelli to decide where to employ the cash from government savings, as well as the proceeds from a raft of privatisations. In addition to the chief economist post, Padoan has been deputy secretary-general of the Organization for Economic Cooperation and Development (OECD) since June 2007 and previously served as an economics advisor to Italian premiers Massimo D'Alema and Giuliano Amato, in charge of international economic policies.

The energetic 39-year-old Renzi, who has been compared to a young Tony Blair, presented his cabinet Friday, with a swearing-in Saturday and confidence votes in parliament on Monday and Tuesday.