Italy’s ruling parties are still bickering over whether to make use of the European Stability Mechanism (ESM) to recover from the COVID-19 crisis. Money, both grants and loans, from the much-awaited Recovery Fund is expected in the second semester of 2021 and until then, EU member states can only use loans from several already agreed tools, such as ESM.
However, these loans will add to the countries’ public debt, which causes fear in many EU member states. The European Commission’s projection for Italy’s debt is at 159% of GDP.
Moreover, ESM loans come with conditionality attached and at the political level, the word bailout is rife with negative connotations and “banished”, especially in Europe’s south.
Nicola Zingaretti, leader of the Democratic Party, has urged coalition partners from the Five Star Movement (M5S) to stop wasting time and accept the ESM as it can provide “resources we have never seen before.
One of the biggest discussion points between the two ruling parties is the refusal of M5S to use the money coming from the ESM.
“If we have to make public debt, let’s make it with a fiscal gap”, Vito Crimi, the political leader of M5S, said during a meeting between M5S MPs on Tuesday to discuss the ESM.
However, the internal affairs undersecretary and MP, Carlo Sibilia (M5S), has said that “M5S wants to help our country. So if we see funds that we can use, we obviously want to use them.”
“But we have to be certain that it’s not a trap, studying the conditions. If the ESM is to have no conditions, we would agree to use it,” he added. (Alessandro Follis | EURACTIV.it)