Finance ministers press Italy to stick to EU fiscal rules

Italian finance minister Giovanni Tria, speaks with Eurogroup president Mario Centeno, on 13 June, 2019. [Council]

EU finance ministers told the Italian government on Thursday (13 June) to meet its fiscal obligations in order to reduce its high debt, with the European Commission insisting on “substantial corrections” to rein in public spending.

Italian finance minister Giovanni Tria insisted however that new measures will not be needed, saying fresh data for the first half of the year will show that the situation of Italy’s public accounts is better than predicted by the Commission.

Italy was not officially on the agenda of yesterday’s meeting of eurozone finance ministers (Eurogroup). But the renewed tensions between Italy’s populist government and the Commission is worrying European partners at a time when the trade war with the US risks worsening, and uncertainties accumulate regarding the UK’s departure from the EU.

Against this backdrop, ministers supported the Commission, and asked Italy to adopt fresh measures to reduce its huge volume of public debt, which currently exceeds 132% of the country’s GDP.

Further adjustments before the next finance ministers’ meeting on 9 July would help to avoid a new excessive deficit procedure that could lead to a €3.5 billion fine (0.2% of Italian GDP).

EU moves closer to debt action as Italy angles for compromise

The European Union moved closer on Tuesday (11 June) to taking disciplinary action over Italy’s growing debt, as authorities in Rome made tentative steps to avert a procedure that could saddle the country with large fines and alienate investors.

“In the end, the rules are something that are not only on paper, they exist for a reason,” said German Finance Minister Olaf Scholz on his way into the Eurogroup. 

“Italy should take the Commission’s helping hand” and adopt “the appropriate measures,” added his French counterpart, Bruno Le Maire.

Spain’s Economy minister, Nadia Calviño, asked Italian authorities to act “in a responsible and constructive manner” to channel the process and avoid “any episode of market turbulence”

Italy's Di Maio, Salvini slam EU debt warning

Italy’s populist Deputy Prime Minister Luigi Di Maio on Wednesday (5 June) dismissed Brussels’ formal warning over the country’s excessive public spending as “too easy”.

Tria repeated the same message that Rome has stressed over the past days since Brussels initiated a sanction procedure against Italy: no additional measures will be necessary as the fiscal situation has improved since December.

The Commission vice president for the euro, Valdis Dombrovskis, insisted however that “substantial corrections” are needed, a message he conveyed to Tria during a meeting on Thursday.

Tria will meet on Friday with the EU’s Commissioner for Economic Affairs, Pierre Moscovici, in Luxemburg, where the Ecofin Council is taking place. 

Italian officials told EURACTIV that the ultimate goal is to avoid an infringement procedure, admitting that Rome will have to pay a “price” for that. But “It’s about not paying a very high price,” the official added as talks with the Commission got underway.

Commission to launch sanction procedure against Italy

The European Commission is preparing to launch a new excessive deficit procedure against Italy as a response to the government’s lack of efforts to control public spending in the highly indebted EU country.

Apart from the  the Italian case, the big issue on the Eurogroup’s agenda was the new budgetary instrument to protect the euro in times of economic shock.

Ministers were discussing on Friday in the early morning  the financing and functionality of the new fiscal instrument to support reforms and investment. According to some reports, its firepower could reach around €17 billion.

Eurogroup to nudge forward EMU reform before next week's EU summit

EU finance ministers will try to close a deal on deepening the Economic and Monetary Union, including a tentative new budget for the eurozone, during the Eurogroup meeting on Thursday (13 June) in an inclusive format. 

[Edited by Frédéric Simon]

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