Italy’s Salvini pushes back against central bank’s caution plea

Rome, Italy - Italian Deputy Prime Minister Matteo Salvini pushed back against a plea for fiscal caution from the head of the central bank.

“We’ll do a courageous budget, the deficit isn’t a problem,” Salvini told the Corriere della Sera newspaper on Sunday. A day earlier, Bank of Italy governor Ignazio Visco had warned the populist government of a negative market reaction and an ‘unsustainable’ risk for the country’s debt pile if its 2019 budget presses ahead with spending increases and plans to widen the deficit.

Salvini said that if the budget is courageous, ‘and it will be’, extra decimal points on the deficit won’t matter. He said he’d spoken to foreign investors. “All of them, and I underline all, told me the same thing: do a courageous, expansionary budget,” he said.

Both Salvini’s anti-migrant League party, and its coalition partner, the anti-establishment Five Star Movement, are pressuring Finance Minister Giovanni Tria as they seek funds to deliver on campaign promises, including a ‘citizen’s income’ for the poor, tax cuts and rollbacks to pension reforms. The government is setting new public finance and economic growth targets, and is due to present its draft budget to the European Commission for approval by mid-October.

Tensions over the budget were heightened by a leaked audio tape of a conversation involving Premier Giuseppe Conte’s spokesman, in which he threatened a purge of Finance Ministry officials accused of holding up the government’s spending plans. As reported by La Repubblica newspaper on Saturday, in the tape, Rocco Casalino complained that Finance Minister Tria ‘is somewhat involved’ in attempts to stymie planned spending increases.