January 22, 2020

Italian finance minister isolated ahead of budget discussions

ROME — Just hours ahead of the release of Italys documento di economia e finanza (DEF) — in effect, a preview of the budget law that will indicate the direction of the coalition governments economic policy — populist politicians are putting the finance ministers job in play.

On Thursday morning, Riccardo Molinari, a top League MP said: “If [Finance Minister Giovanni] Tria is not on board with our project, well find someone else to do his job.” Tria is a non-partisan technocrat who belongs to neither the League nor 5Stars.

Meanwhile, Luigi di Maio, 5Stars leader and economic development minister who is on a trip to Brussels, denied media reports that he wants to sack Tria and that Thursdays Cabinet meeting to discuss the budget targets will be postponed. But he told reporters that his proposals for the so-called universal income and a substantial increase in minimum pensions are non-negotiable.

“European institutions and the financial markets will change their minds on what we are about to do,” he said. In a Facebook live on Wednesday, Di Maio also said this would be a “peoples budget … this will change the country, well get rid of poverty, of the shameful pensions reform and of politicized technocrats.”

Tria, for his part, has pledged to keep Italys public finances under control and abide by EU rules, and has insisted that the countrys deficit-to-GDP ratio will not go over 1.6 percent (3 percent is the EU-required ceiling).

“I swore on the constitution to protect the interests of the nation, not someone elses,” he told a business lobby conference on Wednesday.

The 5Stars and Leagues campaign pledges, if carried out, will together cost Italy an extra €20 billion and are certain to put the country on a collision course with Brussels. In contrast, the 1.6 percent deficit figure proposed by Tria would keep public finances under control and translate into €12 billion of available funding for the governments policies.

“The 5Stars want to push the ratio to over 2.4 percent to make sure their main campaign promises can be immediately financed, while the League would settle for a smaller figure,” one League MP speaking on condition of anonymity told POLITICO.

Di Maio has previously said the 5Stars are ready to let the government collapse if they dont get their way on core economic policies. However, the League, which according to the latest polls has almost doubled its support since the general election in March, wants to avoid a full-fledged government crisis at this stage as it still wouldnt be able to govern on its own.

A Cabinet meeting to discuss these issues, followed by a press conference, is expected to take place later on Thursday. However, timings have not been confirmed, and the latest disagreements within the government could force a delay in the release of the budget document.

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