Here are the criticisms and follies of Brussels on the Italian budget document
How the EU Commission judged the Italian Government's Draft Budgetary Document (Dpb). Facts, numbers and comments by Giuseppe Liturri
What did Brussels say about the Italian Government's Draft Budgetary Document (Dpb)?
The Italian draft budgetary planning document (Dpb) “is in line with the recommendations” adopted by the Council on 20 July, and “many of the measures are supporting economic activity in the face of considerable uncertainty. But some measures do not seem temporary or financed by hedging measures ”. The EU Commission writes this in its opinion on the Dpb. The same conclusion also for France, Lithuania and Slovakia.
In the Italian Dpb – writes the Commission – there are temporary measures equal to 0.3% of GDP, and measures that "do not seem temporary or financed by hedging measures" equal to 1.1%. These "in particular include the cut in social contributions in poor regions, the extension of the tax deduction on income from work, the introduction of the family bonus and higher resources to ministries and other public services".
“The current crisis – writes the EU – has exacerbated some existing challenges, and risks are increasing in countries that already had excessive macroeconomic imbalances” such as Italy. For this reason, the EU Commission has decided to prepare "in-depth analyzes" for Italy and eleven other countries "to identify and assess the severity of possible macroeconomic imbalances". Italy has been in excessive imbalance since 2011, and two years ago risked a procedure. The in-depth analyzes will be published in the spring, the EU warns later than usual, because they will be disclosed together with the assessments on the recovery plans. Germany and the Netherlands are also being monitored for the surplus imbalance.
"Given the level of Italian public debt and the major sustainability challenges in the medium term before the outbreak of the Covid-19 pandemic, it is important for Italy to ensure that, when it takes support measures, it preserves budget sustainability in the medium term" . "Italy is invited to regularly evaluate the use, effectiveness and adequacy of support measures and to be ready to adapt them to changing circumstances," underlines Brussels.
EXTRACT FROM THE ARTICLE BY ANALYST GIUSEPPE LITURRI ON LA VERITA '
From Palazzo Berlaymont they communicate that only the Covid crisis has prevented us from the infringement procedure for deficit and excessive debt. Considering the need for measures to support businesses and households to mitigate the impact of the crisis also for 2021, the programmatic deficit / GDP of 7% is considered in line with the recommendations of the Commission, which, however, estimates it at 7.8% . Furthermore, the Next Generation Eu is as if it were not there or almost: the government inserts subsidies for about 10 billion (0.6% of GDP) in 2021, but the Commission, incredibly, points out that these are plans to be approved in 2021 and therefore it can only take into account a financial advance of 10% (7.1 billion) which only improves the debt profile. Likewise, it does not consider any kind of expenditure linked to these European subsidies, as there are not enough details to date. In short, first they pushed the government to make hypotheses taking into account the NgEu and then they believe that it is premature to make any hypothesis of expenditure and relative GDP growth. Not very reassuring, to be optimistic. Nor is the endowment of the “Rotation Fund for the implementation of the Next Generation EU – Italy”, for a total of 121 billion, provided for by article 184 of the maneuver. This is a purely accounting post intended to act as a reservoir for the funds (both loans and subsidies) that will arrive later in the three-year period 2021-2023. In fact, the rule specifies that "the financial resources entered in the Fund […] are used after the approval of the National Plan to finance projects included therein and maintain, as a destination constraint, the implementation of the PNRR interventions up to the duration of the Plan". But if the Plan is not approved (now everything is blocked) not a cent will be moved.
If, in some way, we pass the examination regarding the temporary measures adopted in 2020 (equal to 6.1% of GDP), it is about 2021 that the Commission will turn up its mouth. In fact, he believes the additional measures envisaged in the Dpb equal to 1.4% of GDP (the approximately 24 billion of the initial installation of the maneuver) for the most part (1.1% of GDP) are not temporary or accompanied by compensatory cuts and therefore threaten to jeopardize budget sustainability in the medium term. Providing support in the short term is fine, but then it all has to fit. In short, a Stability Pact that thrown out the door in March, surreptitiously returns through the window in November. To close, the Commission does not fail to let us know that it will evaluate the reforms and investments that will be presented with the National Plan in 2021, in light of consistency with the priorities and challenges identified by the European Semester. A way like any other to invite us to be diligent and obedient.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/ecco-critiche-e-follie-di-bruxelles-sul-documento-italiano-di-bilancio/ on Thu, 19 Nov 2020 10:32:51 +0000.