Alarm EU: Italy, too much debt – BBC

The EU accounts

Milan , January 25, 2016 – 21:55

Italy runs “high risk” in the medium term for his maxi -debito public, while in the short term the most serious problem is formed by the mass of non-performing loans of the banking system. These appear the main messages sent from Brussels to the Italian Government with the European Commission report on the sustainability of public finances, which identifies risks in other 10 member countries (France, UK, Ireland, Spain, Belgium, Finland, Portugal, Romania, Slovenia and Croatia) not including Greece and Cyprus (as already under bailout program). Immediately came the reply of the Prime Minister Matteo Renzi and the Ministry of Economy of Pier Carlo Padoan, who reiterated the soundness of public finances and the Italian banking system. “Not only are 50 million Italians – said Renzi in a continuously contrasts with the EU -. I know that throughout Italy says yes to Europe but is not prepared to play the part of the one who pays, but it has nothing back. “

The

According to the report of the European Commission, for Italy” risks seem to be high in the medium term from the perspective of analysis of debt sustainability, following a high level of debt at the end of the projections “in 2026. The major concerns arise before any “growth shock” and increase the current very low interest rates, which would make the cost significantly (already 4.3% of GDP) to support about 2,200 billion debt. In Brussels fear that will not be easy to achieve the primary surplus of 2.5% of GDP from 2017 until 2026, which would bring the debt to an acceptable level of around 110% of GDP at the end of the decade. Even more should be done (3.8% of GDP surplus) to meet the commitment of the fiscal compact, which plans to bring in twenty years the debt to 60% of GDP from estimated maximum of 133% in 2015 . “The share of bad loans in the banking sector could be a major source of risk of short-term liabilities” reports the European Commission report, without getting into specifics of the “suffering” shown in Italy in about 200 billion. Economy Minister Pier Carlo Padoan is expected today in Brussels by the EU Commissioner for Competition, the Danish Margrethe Vestager, just to speed up negotiations on a solution on impaired loans in line with the EU rules on state aid. In Brussels a positive report about the long-term sustainability of the pension system, but is the center of a political debate to mitigate the cuts implemented by the latest reforms considered by many excessive.

Credits

The Ministry of Economy replied with reassuring tones to financial sustainability report released by the European Commission because “once again confirms that the Italian public finances have no short-term risks and are by far the most sustainable of all in the long term. ” According to the ministry of Padoan “the heavy public debt makes the country more vulnerable in the event of external shocks, so the indicator S1 ranks us at high risk. And for this reason the government has planned the debt down in 2016 for the first time after 8 consecutive years of growth. ” Net was also the reaction of Palazzo Chigi. “Italy is a country strong, the banking system also – Renzi wrote on his e-news -. However, we must accelerate the measures that are postponed too long, starting with mergers aggregations of banks, starting with the Popolari for which the reform of our government in 2015 – long disputed – is instead decisive and strategic. “

January 25, 2016 (modified January 25, 2016 | 21:55)

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