The Italian finance minister on Monday reassured his eurozone peers that the governments draft budget plans for next year would both promote growth and tackle the countrys debt pile.
But Italys new “growth strategy” would need a little leniency from the EUs fiscal and deficit rules, Giovanni Tria reportedly said.
Thats according to several officials who were briefed on Trias private dialogue with the other 18 eurozone finance ministers during the Eurogroup gathering in Brussels.
Trias reassurances were met with skepticism from the other ministers, who nonetheless refrained from publicly criticizing Rome after the meeting.
The Eurogroup instead issued a short statement calling on “Italy to cooperate closely with the [European] Commission in the preparation of a revised budgetary plan which is in line with the [Stability and Growth Pact].”
Eurogroup President Mário Centeno told journalists after the meeting that he expects Rome to deliver a budget plan that “complies with the European fiscal rules.”
Behind closed doors, ministers statements were more pointed.
Frances Bruno Le Maire, for example, urged Italy to “respect the rules,” as “anything else would mean the end of the eurozone,” the officials said.
The blocs measures demand that countries keep their budget deficit under 3 percent of gross domestic product and keep their public debt under 60 percent of GDP.
Italys budget deficit at the end of last year was 2.4 percent and its public debt, roughly 132 percent of GDP — the second highest in the EU after Greece.
Those numbers could soon increase given the campaign promises that Italys populist coalition government made earlier this year. Those pledges include tax cuts and a minimum income for the poor.
The EUs executive arm has already sent back Italys budget plan for next year and demanded changes. The countrys budget draft attracted “serious concern” from the Commission, which said the proposed measures are an “obvious significant deviation” from recommendations that the Council has already agreed for Rome.
An Italian spokesperson confirmed Trias Eurogroup plea and said Rome is set to reply to those concerns in a letter by November 14, but refused to say whether the government plans to change the budget proposal.
Tria instead told reporters after the Eurogroup that he hopes the spread between Italian and German government bonds would “go down when our strategy will be better understood when we explain our figures and strategy.”
The Commission will issue its final verdict on Italys budget on November 21.
That verdict could get ugly if Rome falls short of the Commissions expectations, as the EUs executive arm will propose to punish Italy for pursuing policies that are in breach of the blocs fiscal rules.
When asked to confirm the Commission plans, Economic Affairs Commissioner Pierre Moscovici urged patience.
“No decisions have been made for November 21, by definition,” he said. “On [November] 13 well have, I hope, a revised [draft budgetary plan]. The quality of the response … has a huge impact on what will happen after that.”