Giovedì, 20 Settembre 2018

EU 'ready to be flexible' with Italy's debt calculations


Brussels, March 18 - The European Commission (EC)
on Monday said it was willing to show a degree of flexibility in
the weight late payments by Italy's public sector have on
calculations of the national debt.
This should allow some extra leeway for Italy, which faces
major challenges in meeting the deficit and debt targets set by
the European Stability Pact.
Last week outgoing Italian Premier Mario Monti sent a
letter to European leaders at an EU summit in Brussels saying
that Italy should be able to use "every possible ulterior
margin" within the European Stability Pact to be able to boost
growth and employment.
Monti's emergency administration implemented austerity
measures to comply with European budget commitments but these
policies deepened Italy's recession and caused unemployment to
rise above 11%.
The approach seemed to be rejected by Italian voters in
last month's election.
Pier Luigi Bersani's centre-left alliance came first in the
elections, but failed to win a working majority in the Senate
because of votes pulled in by three-time premier Silvio
Berlusconi's centre right and Beppe Grillo's anti-establishment
5-Star Movement (M5S).
Both Berlusconi and comedian-turned-politician Grillo were
accused of using Euroskeptic, populist rhetoric in the election
Monti's reform platform backed by centrist parties,
meanwhile, did less well than expected.
The EC outlined its position on Italy's public sector debts
in a joint statement by vice presidents Antonio Tajani and Olli
Rehn, respectively the industry commissioner and economic and
monetary affairs commissioner.
"The excessively tight financing conditions, especially in
southern European countries like Spain, Portugal and Italy, are
hindering the flow of credit to households and businesses. This
is holding back export growth and economic activity," read the
It went on to talk about the Late Payments Directive, which
came into force last week and aims to ensure public sector
contractors are paid promptly and prevent the further
accumulation of commercial debt by public administrations.
"However, the Directive does not necessarily apply to the
outstanding stock of commercial debt," it said.
"In the case of Italy, the authorities have decided that
the new rules will apply only to contracts signed since 1
January 2013.
"A realistic solution to the commercial debt overhang -
which is estimated to be sizeable - is likely to involve a
liquidation plan with the objective of bringing such debt to
levels not related to payment delays within a relatively short
timeframe. The plan should include adequate safeguards against
moral hazard by the administrations responsible for the debt
"While the existing EU framework for budgetary surveillance
does not envisage a special treatment for specific debt and
deficit increasing items, the Stability and Growth Pact allows
taking into account relevant factors in the assessment of
compliance with the deficit and debt criteria.
"In this context, the liquidation of overdue commercial debt
would represent a mitigating factor.
"The Commission is ready to cooperate with the Italian
authorities to help with the technical implementation of the
liquidation plan and would welcome the provision of more
detailed and timely information on the current stock of debt by
level of government".

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