Rome

BOI urges govt to make most of deficit-procedure exit

Italy has to make up 25 years of lost ground says Visco

BOI urges govt to make most of deficit-procedure exit

(By Denis Greenan). Rome, May 31 - The Bank of Italy on Friday urged the government to make the most of budget savings ensuing from Italy's exit from the European Commission's excessive deficit procedure. The termination of the procedure opened in 2009, recommended by the EC earlier this week and expected to be rubber-stamped by EU leaders at an upcoming summit, is the "first fruit" to grow from the former government's efforts at fiscal consolidation and should not be squandered, Bank of Italy Governor Ignazio Visco said. "The exit from excessive deficit procedure...should be considered an investment on which to build," Visco told the central bank's annual meeting in Rome. Former premier Mario Monti's government introduced strict budget measures that led to an EC decision this week to close the procedure. That is expected to free up about eight billion euros for the current government in the 2014 budget. Visco also said the government must act quickly to reduce taxes over the medium term to stimulate the economy. Immediate action is needed because high taxes are "holding back employment and business activity," he said. Taxes that affect productivity should be first on the chopping block, he added. Italy has been slow to react to deep structural changes in the global market place, Visco went on to say. Over the past 25 years, Italy has failed to take part in enormous marketplace restructuring and must now act fast to catch up, he said. "We were not able to respond to the extraordinary geopolitical shifts in technology and demographics of the last 25 years," Visco told the central bank meeting. That is now taking an enormous toll on the Italian economy and government policy reform is essential to catch up and stimulate an economic recovery, he said. In other remarks, the central banker said interest-rate cuts by the European Central Bank have been effective and the ECB stands ready to cut again if necessary. Cutting rates to increase liquidity in the eurozone, "has proven effective," Visco told the meeting. But more may be needed, he added. "The ECB is examining, in concert with other European institutions, initiatives to promote issues of securities backed by loans to businesses". Visco also called for measures to "break the negative spiral" in credit availability in the economy, the result of a drop in the amount of lending by nervous banks to businesses. At the same time, companies have been increasingly afraid to borrow, leading to economic stagnation. Visco spoke amid more gloomy news for the economy as the unemployment rate hit a record high of 12.8% with youth joblessness reaching an unprecedented 41.9%.

Lascia il tuo commento

Condividi le tue opinioni su Gazzetta del Sud online

Caratteri rimanenti: 400

Le altre notizie

i più letti di oggi

Natalina tornava dal lavoro

Natalina tornava dal lavoro

di Salvatore De Maria