(supersedes previous)The Bank of
Italy (BoI) on Friday urged the government to take advantage of
the country's fledgling economic recovery and favorable
macroeconomic circumstances to cut public debt.
In an economic bulletin the central bank called on
policymakers "to fully take the opportunity offered by
exceptionally favourable financial and monetary conditions and
the gradual strengthening of the recovery".
"The time frame for rebalancing public accounts must ensure
a clear and progressive reduction in debt," it added.
The central bank confirmed the economy is in recovery and
revised upward its July forecasts on 2015 GDP growth.
"GDP growth could turn out to be slightly above 0.7%," it
said. It also confirmed a rise in domestic consumption and a
slow recovery in productive capital investments.
The gradual "reduction in taxes is consistent with the need
to lower elevated fiscal pressure" that is hampering growth.
"The most directly effective measures are those cutting the
burden on production factors" while the abolition of property
taxes "could have circumscribed effects on consumption," the BoI
said.
Government labor policies have generated at least one
fourth of new jobs this year. Of those, one third were directly
related to Premier Matteo Renzi's signature Jobs Act and
two-thirds to tax breaks on new full-time permanent hires,
according to the central bank.
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