EU to ask Italy to explain deterioration of public finances

EU to ask Italy to explain deterioration of public finances
  • Clock-gray 15:37
  • calendar-gray 29 May 2019

The European Commission will ask Italy on Wednesday to explain what factors contributed to the deterioration of its public finances as the EU executive prepares a report that is likely to be the basis of disciplinary action against Rome,APAreports citing Reuters.

The Commission’s request, in the form of a letter to Italy’s finance minister Giovanni Tria, is a legal obligation under EU law when a country has a public debt above the EU ceiling of 60% of gross domestic product and is not reducing it as required.

Italy’s debt rose from 131.4% of GDP in 2017 to 132.2% in 2018 and will go up to 133.7% this year and to 135.2% in 2020, according to Commission forecasts.

To make matters worse, Italy’s structural deficit, which under EU law should shrink by 0.6% of GDP a year until it is in balance, has instead been rising every year since 2015.

The structural deficit, which excludes one-off revenue and spending and the effects of the business cycle, is set to reach 2.4% of GDP this year and 3.6% in 2020 unless policies change.

“The letter to Italy will be sent in the afternoon after the meeting of the college of commissioners,” one EU official said.

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