The Commission had rejected Italy’s budget plan for 2019, said Valdis Dombrovskis, European Commissioner for the euro, social dialogue, financial stability and capital markets on Tuesday in Strasbourg. This was the first step in the assessment of the euro area budget plan. The negative attitude to the proposal with a 2.4 percent deficit at the state’s high debt did not change the explanation given to it by the Italian government on Monday. Rome received a three-week deadline for introducing a new proposal.
As commissioner for economic and monetary affairs, taxes and duties, Pierre Moscovici, said, the Commission’s decision should not be a surprise given the deficit and debt level of the state combined with the growth potential of the Italian economy. At the same time, he clarified that the Commission does not want to question the priorities of the Italian government, which is an effort to promote investment or fight poverty, but is not afraid of the impact this budget may have on Italian citizens.
Italy’s debt reached 131.8 percent of the country’s gross domestic product in 2017, and after Greece’s debt is the second highest in the euro area. Thus, the burden per capita is approximately 37,000 euros. The ceiling of the European Union approves debt at 60 percent of GDP.
Finance Minister Giovanni Tria, however, was pushing for the budget deficit at 1.6 percent of GDP, which is the same as the one that is set for the current year, but without success. The Italian government on Saturday approved a problematic budget despite the deteriorated rating of the country, realizing it is violating the rules of the European Union, which has led to investors’ concerns. As the Italian Deputy Prime Minister and Chief of the Five Star Stars Movement Luigi di Maio said, the budget rejection was not surprising, he was expecting it. The problem is that the management plan was first created in Rome and not in Brussels, as in the overrun of the deficit.
Italy will not change its draft budget for next year. In an interview with RTL radio station, said Deputy Prime Minister Matteo Salvini today.
According to Dombrovskis, Italy wants to openly and consciously withdraw from the commitments it has taken. It is tempting to try to cure the debt with new debt, but at some point it needs to be repaid, he said.