Top IMF of­fi­cial is­sues fresh warn­ing to Italy over bud­get plans

Iran Daily - - Global Economy -

The IMF’S top of­fi­cial on Europe has is­sued a new warn­ing to Italy’s govern­ment over its bud­get plans, say­ing it should be shrink­ing the coun­try’s deficit in ac­cor­dance with EU rules rather than ex­pand­ing it.

The re­marks by Paul Thom­sen, the head of the IMF’S Euro­pean de­part­ment, come as the fis­cal stance pushed by the pop­ulist govern­ment in Rome is emerg­ing as a grow­ing risk for the global eco­nomic out­look, re­ported.

In­vestors have balked at plans to in­crease the 2019 bud­get deficit to 2.4 per­cent, send­ing yields on Ital­ian debt higher in re­cent weeks. “This is not the time to re­lax fis­cal pol­icy, this is the time to have some...struc­tural ad­just­ment,” Thom­sen said. He said Rome should fol­low EU fis­cal rules, which re­quire that coun­tries with debt lev­els as high as Italy’s should be pur­su­ing poli­cies that re­duce their in­debt­ed­ness.

“I agree with the [Euro­pean] Com­mis­sion that its very im­por­tant that Italy has a 2019 bud­get that is con­sis­tent with the Euro­pean fis­cal frame­work,” Thom­sen said.

The IMF of­fi­cial also made a broader point, that coun­tries with high debt should be us­ing this pe­riod of mod­est but above-po­ten­tial eco­nomic growth to im­prove their fis­cal po­si­tions, so they have more room to stim­u­late the econ­omy in the event of a new re­ces­sion.

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