Rome

Grilli defends 40-billion-euro debt increase in parliament

'Stimulus effects visible by mid-2013' says economy minister

Grilli defends 40-billion-euro debt increase in parliament

Rome, March 28 - The economy minister on Thursday said the government's decision to increase debt by 40 billion euros over the next two years will produce positive stimulus results by mid-2013. "Injecting liquidity into the economy will jumpstart domestic demand already by the middle of the year," said outgoing Economy Minister Vittorio Grilli, whose government should soon be replaced by politicians elected in late February. To meet all of its commitments, including social spending, the government announced plans last week to increase debt by 20 billion euros in 2013 and 20 billion euros in 2014. The increase in debt was made possible after the European Commission (EC) in Brussels gave Italy more flexibility in its national debt levels despite a stability pact signed by nations including Italy that fixed those debt levels. Grilli was addressing a special committee in parliament, where a political logjam continues as the three parties that gained the most votes struggle to find some way to work together to form a new government. His plan has undergone harsh criticism from the anti-establishment 5-Star Movement (M5S) of Beppe Grillo, which holds the balance in the divided parliament.

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