Sunday , May 29 2022

Despite pressure from Brussels, the Italian budget "does not change"



The popular Italian government, which called the European Commission to review its budget for 2019 before Tuesday, confirmed with night-end that it did not intend to give, taking the risk of financial penalties, and its implementation still theoretical.

"The budget does not change either in the balance or growth prospects, and we are convinced that this budget is the one that needs the country to be restarted, "said Luigi Di Maio, Deputy First Minister and leader. of 5 star movement (M5S, antisystem).

"Our goal is to keep the deficit at 2.4% of GDP, and we are committed to maintaining it," he told reporters after a cabinet meeting and met with his ally Matteo Salvini, the head of the League (very far) and the head of government, Giuseppe Conte.

"We are working on a budget that guarantees more jobs, more pension rights and fewer taxes … If it's suitable for Europe better, if it's not suitable for Europe , continue anyway, "Mr. Salvini came to this meeting.

For government, the anti-difficult budget will re-launch the sewage growth and thus reduce the public deficit and massive public debt.

But for the first time in the history of the European Union, Brussels authorities rejected the Italian draft budget on October 23. With the support of the entire eurozone, they continue to delays to Italian debates, which promise a 2.4% GDP deficit in 2019 and 2.1% in 2020.

According to the Commission, the predicted measures in the budget could push the deficit to 2.9% next year and 3.1% in 2020. Especially as it predicts a growth of 1.2%, while Rome is count at 1.5%.

In a report released Tuesday, March afternoon, the International Monetary Fund (IMF) confirmed even 1% growth forecast in Italy in 2020 and was skeptical of the reforms published by the government.

"The focus of the authorities on growth and social inclusion," said the fund, but current projections are expected to keep public debt around 130 per cent of the GDP for the next three years.

According to Italian media, Minister of Economy Giovanni Tria is expected to send a letter to Brussels in the next hours to explain the government's decision, together with a presentation of the government's structural reforms and planned investment plans. .

"Excessive defect procedure"

By refusing to change its budget, Rome is open to opening a "procedure for undue deficit", which is likely to result in a financial penalty equivalent to 0.2% of GDP (approximately 3.4 billion or euro). euro).

In front of the European Parliament in Strasbourg, the German Chancellor Angela Merkel repeated that the EU wanted to "come out" to Italy, the foundation country of the union.

"The Italian has also adopted many of the rules that we have all in common now," he said. "I hope that a solution can be found."

European Commissioner for Economic Affairs, Pierre Moscovici, has also multiplied calls for dialogue, hoping to reach "compromise".

According to Lorenzo Codogno, the founder of the company LC Macro Advisors, Italy should be in excessive (EDP) procedure "by the end of January", but the three to six month period to prepare plans for corrections "will allow the Italy to reach European elections without barriers ". Then "nothing will happen before the new Commission is in operation" in the fall of 2019.

According to Mr Codogno, due to the lack of rapid action at European level, the financial markets will "usually be true, guardian of budgetary discipline".

Since mid-May, negotiations for the formation of the popular coalition, the spread, the gap seen between Italian and German lending rates have doubled, increasing about 300 points. According to the Italian Bank, this represents an additional cost of 1.5 billion euros in interest over six months.

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