Italy could be given six months to address debt woes

REUTERS
BRUSELSS
Published 25.06.2019 00:18

The European Commission could give Italy until January, instead of October, to make fiscal policy changes under an EU debt procedure, minutes of an EU meeting show, a move meant to avert a possible backlash from Rome's euroskeptics.

Unless the government makes concessions this week on its spending plans for 2019 and 2020, the EU executive is expected to propose on July 2 that a disciplinary procedure be opened over Italy's rising debt. The procedure, which would need to be endorsed by EU finance ministers at meetings on July 8-9, would force Italy to quickly tighten fiscal policy or face fines.

Under EU rules, once a disciplinary procedure is launched against a member state, the Commission can set tight deadlines for action. The shortest is three months, which would mean Rome would need to adopt new fiscal measures by October. But Brussels is considering giving Italy six months to address the most urgent shortfalls, according to minutes of the Commission's June 5 meeting that were published on Friday.

After that meeting, the Commission said a procedure against Italy was warranted because it had violated EU debt rules in 2018 and was forecast to go further beyond the agreed limits this year and next. Italy's debt grew to 132.2 percent of gross domestic product in 2018, more than twice the EU's 60 percent ceiling, and is expected to rise even further, defying rules that say it should fall.

Commissioners at the meeting insisted that data underpinning the possible procedure could not be contested by Rome. But the minutes show the Commission was open to giving Italy more time to address shortfalls, in an attempt to avoid antagonizing Italian euroskeptics.

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