Italy president, central banker warn over deficit plan

Italy’s president and central bank governor warned on Saturday that the country’s debt must remain sustainable after last Thursday the populist government unveiled plans to significantly raise deficit spending next year. President Sergio Mattarella noted that the state’s founding law requires “balanced budgets and the sustainability of debt.”  “This is to protect the savings of our fellow citizens,” he said.

A little later Bank of Italy Governor Ignazio Visco said the country’s debt, the largest among big EU economies at 131% of GDP, must not be allowed to increase. “Italy needs to favour public and private investment and to contain and reduce public debt,” Visco said, according to Ansa state news agency. The debt must be “put on downward path,” he added.

Matteo Salvini, leader of the League and a deputy PM, responded to Mattarella by saying that years of Brussels-imposed austerity had driven up debt.  “Be calm Mr. President,” Salvini said in a statement. “Years of budgets imposed by Europe have made our public debt explode... finally we are changing course and betting on the future and on growth.”

The ruling parties pushed Economy Minister Giovanni Tria, who is an economist unaffiliated with either group, to sign off on their plans to hike deficit spending. Italian media said Mattarella had supported Tria’s failed effort to keep the deficit target below 2% of GDP. The president can reject a law and send it back to parliament, but he can do so only once. Parliament can then pass it again, unchanged, and he must sign it into law.

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