November 19, 2018
Finance

Commission considering punitive action for Italy over budget 

European Commission Vice President Valdis Dombrovskis confirmed Tuesday that Brussels is looking into proposing an “excessive deficit procedure” against Italy to get the country to fall in line with the EUs fiscal rules.

“Indeed, its something we are looking at,” he said during a press conference at the end of the ECOFIN meeting on Tuesday.

Dombrovskis explained that Italy in previous years escaped the procedure because “our conclusion was that Italy is broadly compliant with requirements of the stability and growth pact, [and] this is a relevant factor of not opening an excessive deficit procedure based on debt.”

This year, however, Italy has submitted a draft budgetary plan which the Commission has rejected for defying its previous commitments. “If [the budget plan] wont change, it is a material change, and we need to reconsider our conclusion regarding the excessive deficit procedure,” Dombrovskis said.

POLITICO reported on Monday that the Commission is working on a new excessive deficit procedure report and is likely to suggest the opening of an EDP on account of Italys enormous debt — based on final 2017 data — as early as November 21. The new EDP report was scheduled for May 2019, but the Commission decided to speed it up considering that the Italian governments proposed budget substantially changed the countrys previous commitments and fiscal stance.

The vice president confirmed that the Commission sent a letter to Italy asking it to provide the “relevant factors” which should be considered when making the new assessment.

Italian Finance Minister Giovanni Tria left the ECOFIN meeting in Brussels today ahead of its conclusion without releasing any statement.

Rome has until November 13 to rework its draft budget plan. The date is also the deadline to respond to the Commissions letter requesting the “relevant factors.”

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