EC 'closes' Italy's deficit procedure

Tajani makes announcement via @AntonioTajaniEU

EC 'closes' Italy's deficit procedure

Brussels, May 29 - The European Commission has recommended that the excessive-deficit procedure against Italy be closed, European Industry and Entrepreneurship Commissioner Antonio Tajani said Wednesday. The end of the procedure will free up eight billion euros for the Italian government. This is because States that are under an excessive deficit procedure and have a debt-GDP ratio of over 60% are obliged to divert public money into trying to reduce that ratio. Italy's debt-GDP ratio is around 130%. The EC is closing the procedure it opened in 2009 as Rome has forecast that Italy's budget-GDP ratio will be under the 3% threshold allowed by the European Union this year, at 2.9%. It was 3% last year. A country has to be within the deficit margin for two consecutive years for the procedure to be closed. The procedure will formally be closed after the ECOFIN and the European Council ratify the EC's recommendation. Tajani, who is also vice-president of the European Commission, announced the EC wanted to close the procedure via his Twitter account, @AntonioTajaniEU, during a meeting of the EU executive. But he subsequently removed the tweet as it came before an embargo on the official announcement. Premier Enrico Letta stressed earlier this week that the end of the procedure does not mean the government has extra cash available immediately to use for a number of pressing problems faced by his left-right administration. "The closure of the EU procedure for excessive deficit is certainly good news, but it will only have an effect on our budget in 2014," Letta told a meeting with regional governors. "As we know, it will not free up resources immediately". Letta needs to find money for measures to boost jobs in recession-hit Italy, with the number of unemployed close to three million and almost four out of 10 young people aged 15-to-24 jobless. He wants to avoid a 1% increase in the top band of value added tax scheduled for July too, although Economy Minister Fabrizio Saccomanni said Tuesday that this may not be possible. Letta will also need around eight billion euros if he is to satisfy demands from Silvio Berlusconi's People of Freedom (PdL) party to scrap the IMU property tax and return revenues taken in 2012. The PdL has threatened to withdraw its support from Letta's government and sink it, unless the tax is scrapped to respect a key pledge Berlusconi made in the run-up to February's election. Letta, who belongs to the centre-left Democratic Party (PD), has suspended the IMU payments due in June and promised to revamp the tax, but he has so far not pledged to abolish it completely.

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