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EC welcomes blueprint, but says Italy must balance budget

Rehn happy about reforms, spending cuts

09 April, 13:31
EC welcomes blueprint, but says Italy must balance budget (ANSA) - Brussels, April 9 - European Economic and Monetary Affairs Commissioner Olli Rehn's spokesperson said Wednesday that the EU welcomed aspects of Premier Matteo Renzi's economic blueprint, but reminded Italy that it was obliged to balance its budget in structural terms. "Italy must balance the budget to reduce its debt and be in line with the (EU) rules," he said, referring to the country's massive public debt of over two trillion euros.

The blueprint, the Economic and Financial Document (DEF) that was approved by Renzi's cabinet Tuesday, outlined the government's plans to boost Italy's weak recovery, as well as its macroeconomic forecasts.

It put Italy's deficit-to-GDP ratio at 2.6% in absolute terms this year, below the EU-allowed threshold of 3%, but some way from balancing the budget in structural terms. The structural deficit - with the fixtures adjusted to account for variations in the business cycle - will be 0.6% this year, the document said.

But it added that the budget will be balanced in structural terms in 2016 and it will almost get there next year, with a structural deficit of 0.1% of GDP.

The DEF said the debt-to-GDP ratio was set to rise to 134.9% in 2014, while stressing this would be much lower, 131.1%, if Rome did not have to contribute to European Union rescue funds. Rehn's spokesperson stressed that the DEF also contained many positive plans.

"The Commission welcomes the acceleration of reforms in Italy and the intention to quickly proceed with privatizations, rationalisation of spending, efficiency in the civil service," he said.