Italy bows to EU, cuts its deficit tar­gets

The Phnom Penh Post - - BUSINESS -

ITALY’S pop­ulist govern­ment will bow to pres­sure from Brus­sels and re­duce its bud­get deficit tar­gets for 2020 and 2021 in a bid to re­as­sure skit­tish mar­kets, two Ital­ian dailies re­ported Wed­nes­day.

Af­ter declar­ing last week it was set­ting the pub­lic deficit at around 2.4 per cent of gross do­mes­tic prod­uct (GDP) for the next three years, Rome now plans to re­duce the tar­geted gap to 2.2 per cent in 2020 and 2.0 per cent in 2021, the Cor­riere della Sera and Repub­blica dailies said.

Prime Min­is­ter Giuseppe Conte had sought to as­suage con­cerns over the bud­get late Tues­day, by vow­ing to speed up Italy’s ef­forts to re­duce its pub­lic debt which is at a sky­high level of 131 per cent of GDP.

The govern­ment has agreed to work to lower debt lev­els “con­sis­tently over three years”, Conte said in a state­ment af­ter meet­ing other top min­is­ters to dis­cuss the is­sue.

He gave no num­bers how­ever, and of­fi­cially the govern­ment said it would fol­low through with i t s or ig­i­nal plans.

Fur­ther dis­cus­sions

Conte and the lead­ers of Italy’s coali­tion par­ties, the far­right League and anti-es­tab­lish­ment Five Star Move­ment, were set to meet again to dis­cuss the is­sue fur­ther on Wed­nes­day.

On Tues­day, League head Mat­teo Salvini, who is a deputy prime min­is­ter, threat­ened to seek dam­ages from Euro­pean Com­mis­sion pres­i­dent Jean-Claude Juncker for scar­ing off in­vestors by at­tack­ing the bud­get plans.

The yield on Ital­ian govern­ment bonds has spiked higher in re­cent days as wor­ried in­vestors de­mand more in­ter­est to hold onto Ital­ian debt.

The closely watched spread be­tween the rates on 10-year bonds paid by Italy com­pared with those of­fered by Ger­many, which is a mea­sure of the added risk per­ceived by in­vestors to hold­ing onto Ital­ian debt, also rose.

It hit t he high­est level in a month on Mon­day amid fears that Ita ly’s mam­moth debt – the eu­ro­zone’s sec­ond big­gest a f ter Greece – cou ld g row even f urt her.

Eu­ro­zone fi­nance min­is­ters on Mon­day warned Ita ly to abide by EU rules on pub­lic spend i ng , j u s t day s a f t er Rome an­nounced a big spend­ing boost in def iance of Brus­sels.

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