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Berlin calls Renzi plan 'ambitious' before euro talks

Premier to meet Hollande Saturday, Merkel Monday

14 March, 20:17
Berlin calls Renzi plan 'ambitious' before euro talks

(By Paul Virgo) (see related story on Fitch's forecasts) (ANSA) - Rome, March 14 - The German government on Friday called Premier Matteo Renzi's economic-reform agenda "ambitious" ahead of a bilateral talks in which the Italian leader will seek to reassure his European partners that Rome is not going astray with its budget commitments.

Renzi, Italy's youngest premier at 39, announced an array of measures on Wednesday to revive the economy, which remains weak after emerging from its longest postwar recession last year, with unemployment at record levels of close to 13%.

He presented plans to cut income taxes by 10 billion euros, invest 1.74 billion euros in social housing programs, spend 3.5 billion euros on schools and repay 68 billion euros in outstanding bills, among other things.

The leader of the centre-left Democratic Party (PD) party, who unseated his PD colleague Enrico Letta to take the helm of government last month, will meet French President François Hollande on Saturday.

Then Renzi will meet German Chancellor Angela Merkel, the main advocate of the austerity policies that Italy and other countries were forced to adopt during the eurozone debt crisis, in Berlin on Monday ahead of a summit of European Union leaders in Brussels next Thursday.

German government spokesman Steffen Seibert did not say whether Berlin used the word ambitious in a positive light, or considered the plans overambitious. "I don't want to give away the content of what they'll reveal right afterward," Seibert said referring to Monday's meeting.

Renzi has said his plans will not cause Italy to breach the 3%-deficit-to-GDP threshold allowed by the EU. But the EU wants Italy to do more than just stay under the deficit limit, saying it also has to work towards respecting its commitments in the Fiscal compact, which says countries with debt-to-GDP ratios over over 60% must make progress on bringing it down.

Italy's massive public debt of over two trillion euros stands at around 133% of GDP and is a forecast to keep rising this year. Renzi may try to persuade other European leaders that Italy needs some financial leeway, while remaining under the 3% threshold.

The premier said Thursday that the EU must not just be a fiscal policeman that imposed "limitations" after the European Commission stressed that it would only be able to properly assess Renzi's measures when it has the "details of the legislation" and that Rome must abide by its budget commitments.

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