Italy legislators approve controversial deficit target

Italy legislators approve controversial deficit target

Mubasher: Italian lawmakers voted in favour of the government’s fiscal outline, comprising deficit-raising spending goals, in defiance to Eurozone allies who had been pushing for changes.

The two houses of Italy’s parliament passed on Thursday motions supporting the populist government’s adjustment to the Economic and Financial Document, which targets a deficit of 2.4% of the gross domestic product (GDP), which was criticised by the European Union (EU) officials.

The parliament’s budget office as well as the Bank of Italy also criticised as unrealistic.

Under the document, the government also set a deficit goal for 2020 at 2.1% of GDP and 1.8% for 1.8%, with a deduction of debt ratio between 2019 and 2021.

Italy’s government is determined “to ensure the steady reduction of the public debt to GDP ratio” Finance Minister Giovanni Tria  stated during talks with US Treasury Secretary Steven Mnuchin on the sidelines of a summit of G-20 in Bali, Indonesia.

Tria also said that this would help funding planned measures, which included an income-support tool, lower retirement age and corporate tax deductions.

However, EU economy head Pierre Moscovici and EU commissioner Valdis Dombrovskis warned Rome that the wider-than-expected budget goals represented “significant deviation” from the bloc’s agreed-upon fiscal route.

This was met by defiance from the League’s Deputy Prime Minister Matteo Salvini and the Five Star Movement’s Deputy Premier Luigi Di Maio, stating that they would not back down from their plans.

A draft budget is due to be presented in Brussels for inspection on Monday.

The European Central Bank (ECB) does not intend to save Italy, should the government or the banks run out of cash, unless Rome gets a bailout from the EU, five top informed sources told Thomson Reuters.