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Giorgia Meloni's government estimates a deficit-to-GDP ratio
this year broadly in line with its 4.3% goal set in September,
therefore far above the 3% ceiling set by EU rules.
During a parliamentary hearing, Economy and Finance Minister
Giancarlo Giorgetti acknowledged that this meant the EU was
likely to invoke its deficit reduction procedure, but said this
was also true of other member countries including France.
"It is granted that the European Commission will recommend the
Council to open an excessive deficit procedure against us as
well as several other countries," Giorgetti said during a
parliamentary hearing. "Us, France and 10 others."
The infringement procedure will oblige Italy to cut its
structural deficit -- net of one-off factors and business cycle
fluctuations -- by a minimum 0.5% of GDP per year.
Giorgetti however said Rome's current budget plan announced last
September and set to be reviewed on April 9 would already be in
line with the EU requirements to cut the fiscal gap over time.
"We are not so dumb as to have made a negotiation without
knowing what the scenario was that we were going into," he said.
The latest reform of the bloc's two-decade-old fiscal rules sets
a slow but steady pace of deficit and debt reduction from 2025
over four to seven years, with the longer option available if a
country undertakes reforms and investments in areas the EU
prioritises.
Being placed under a deficit reduction procedure would
temporarily shield Italy from an EU requirement that it reduce
its debt by a minimum of 1 percentage point per year. As things
stand, the government envisages reducing the debt-to-GDP ratio
by just 0.6 percentage points from 2023-2026.
On the other hand, countries under such a procedure may not be
eligible for TPI, a scheme created by the European Central Bank
(ECB) to buy government bonds from countries that suffer a
market attack.
Outlining plans to keep strained state finances in check,
Giorgetti added it would be appropriate for state-controlled
companies to keep their liquidity in a current account with
Italy's Treasury.
(Editing by Giulia Segreti and Peter Graff)
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