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This article was published May 12, 2016 at 6:46.
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the reduction of the debt / GDP ratio remains one of the key objectives of the Government’s fiscal policy, together with that of a progressive reduction the deficit. Writes Minister Pier Carlo Padoan in the letter dated 9 May (and published yesterday on the site of MEF) to Vice-President of the EU Commission, Valdis Dombrovskis, and the Commissioner for Economic Affairs, Pierre Moscovici in response to European demand came on May 2 in which he called Italy an illustration of detail on the trajectory of the debt. A letter was also read in the College of the Commission Tuesday meeting where, in view of the judgment of 18 May, hath been given the green light to a substantial flexibility while emphasizing the critical Italian position on the debt front. Padoan’s letter accompanying the document MEF 80 pages where you line up all the “relevant factors” that influenced the recent debt dynamics, from deflation and weak growth, and that should be taken into account in overall evaluations of compliance or otherwise of the rules of the stability and growth Pact for a country like Italy, which is not in the excessive deficit procedure.
In the letter the minister reiterated that the stability program sent to Brussels in April fully respects the parameters of the ‘preventive arm’ for 2016. While the 2017 confirmation that the safeguard clauses providing for the increase of ‘Vat for the moment remain and they will only be deleted with a new law. It is then confirmed that the cancellation of the clauses, which will happen with the next budget law, will be consistent with a reduction in the deficit / GDP. And remember, finally, as Italy boast one of the best indicators of sustainability long-term debt due to past reforms are affecting spending on security. In the missive Padoan does not fail, then, a reference to the extraordinary commitments incurred in 2015 and that will be replicated this year for Relief and reception of migrants (0.2% of GDP); an expense well to considering requests for flexibility on the current year.
In the document the Italian point of view on debt is summarized in ten points. It sticks remembering that the debt / GDP in 2015 was “virtually” stabilized at 132.7% share from 132.5% in 2014. The government believes that will fall to 132.4% in 2016 (but the Commission estimates that will remain 132.7%) and more markedly in 2017 to 2019, reaching 123.8% in 2019. Since 2012, he continues, thanks to primary surpluses (the balance of revenue and expenditure net of interest payments on debt) has been complied the parameter of the 3% deficit / GDP fell by 3% in 2014 to 2.6% in 2015, projected to fall to 2.3% this year and 1.8% in 2017. a reduction in ‘fast track’ is then indicated in 2018-2019 (new year target for the structural balance).
the rule of debt, which includes the decline of one-twentieth per year of the amount above 60% of GDP, is “broadly met in 2017 on the basis of a vision towards the future “, it is confirmed in the MEF document. The estimated decline in 2017-2019 is based on higher nominal GDP growth than it is today, the highest primary surplus, revenue from privatizations ‘significant’, the lowest debt burden (in terms of interest rates), decreased scrap between deficits and financing needs. Bloomberg guest, in London, yesterday the minister called a “success story” privatization of Poste adding that he is looking at the possibility “of giving a greater share and seeing where we can get.” An alternative scenario to the privatization of Railways, for the moment postponed, and that, along with other operations (ENAV and property disposal) should ensure the expected target in Def.
In the document on “relevant factor” sent to Brussels in addition to the numbers on the budget aggregates indicate the macroeconomic environment conditions ( “deflationary forces are more powerful than it believes the Commission ‘) that make it extremely difficult debt reduction. And it returned to the issue of measuring the output gap (the difference between actual growth and potential), unanimously recognized as fallacious nell’Ecofin ten days ago and will be reviewed. Missing Not to mention the other elements of “virtuosity” related to the management of our debt, with a presence of securities with a maturity equal to more than 10 years came to 20% of the stock in 2015 (it was 16% in 2014) . Finally a reference to structural reforms, which “continue at full speed.” Their effects on growth are estimated at 2.2% for 2020, 3.4% by 2025. The document lastly points out that flexibility linked to national reforms and spending plans for investment (0.75% of the total requested Italy on 2016) does not take into account the reforms of other EU countries and the potentially pro-cyclical effects that these asymmetries may determine (low growth and deflation). A “factor” in more to consider in the judgment now expected on the respect of the Italian debt rules.
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