Daily Management Review

Italy avoids EU sanctions for high national debt


Italy avoided the threat of disciplinary action from the EU by convincing the European Commission that the new measures introduced this week will help bring the country's growing debt in line with the budget rules of the bloc, reports Reuters.

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The European Commission said that at this stage the Excessive Deficit Procedure (EDP) is no longer required, since Italy is expected to generally comply with the requirements of the EU Stability and Growth Pact this year.

EDP is a procedure that the European Commission can initiate against any EU member state that exceeds the budget deficit limit or cannot reduce its debt. The launch of a disciplinary procedure threatened Italy with a fine.

The yield of Italian bonds fell amid Rome reaching an agreement with Brussels.

Italian Economy Minister Giovanni Tria said that the government’s efforts were “rewarded twice” - the EC’s refusal of disciplinary procedures and a positive market response, which resulted in the cost of borrowing for the country.

“Europe recognized our seriousness and responsibility,” wrote Italian Prime Minister Giuseppe Conte on Facebook. “Italy is a great and trustworthy country, and today we have yet another confirmation of this.”

The European Commission said that the Italian government made additional efforts this year to partially offset deterioration in the structural balance of 2018.

The Commission called on Italy to comply with its obligations to prepare the budget for 2020 in accordance with the EU budget rules. The draft budget should be submitted to the EC for consideration by October 15. Italy pledged to reduce the structural deficit next year, as was done in 2019, thanks to recent measures that reduce costs and increase revenues.

source: reuters.com

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