Yes Europe that flexibility granted to Italy 14 billion deficit – The Messenger

BRUSSELS In the end the Commission Jean-Claude Juncker made another gesture in the direction of Matteo Renzi government for 13.5 billion flexibility this year and avert the danger an excessive deficit procedure, Italy will have to include in the budget law for 2017 about 3 billion more than envisaged in the Economic and Financial Document. In essence this is the outcome of the exchange of letters between Brussels and Rome which ended yesterday, on the eve of the decisions that the Commission should take on the situation of the public finances of EU Member States.

The outcome of the discussion in the College of Commissioners it is still uncertain, especially for the cases of Spain and Portugal who are at risk sanctions. But the compromise proposal sent to Italy by the vice president responsible for the euro, Valdis Dombrovskis, and the Commissioner for Economic Affairs, Pierre Moscovici, is clear: “our current assessment of the planned fiscal effort for 2017 shows a gap between 0.15% and 0.2% of GDP, “so that Italy is” broadly in line “with the Stability Pact. Cover this hole, “is essential to avoid a significant deviation ‘and comply with all the conditions for” granting flexibility linked to structural reforms and investment in 2016, “warned the two commissioners. And the answer of Economy Minister Pier Carlo Padoan, while not making promises on figures and measures, it was not long in coming: “Allow me to reiterate the commitment of the Italian government (…) to substantially comply with the budget rules EU in 2017. I am confident that a significant deviation will be avoided. “

POSITION
 The term “broadly compliant” contained in the exchange of letters is the key to understanding the tradeoff between Rome and Brussels. To Italy you are not asked to be perfectly “in line” ( “compliant”, ed ) with the rules of the Stability Pact – which would impose a structural effort for next year of more than 0, 5% of GDP against 0.1% expected by Def (about 8 billion more). The Commission provided that they are “broadly in line”: the deviation should be below 0.5% over one year, or 0.25% in the two-year average. In essence, the judgment is postponed to November, when the government has sent to the Commission on the draft budget law for 2017 with measures to fill the “gap” of 0.15-0.2%.

the smallest difference – 0.05% – is due to a different calculation of the so-called potential growth to take account of the Italian claims on the methodology used by the executive Community. By contrast, the Commission is expected to announce today a report on the possible violation of the debt rule that, like last year, could end with an acquittal due to so-called ‘relevant factors’.

In their letter, Dombrovskis and Moscovici also confirmed its intention to grant the flexibility allowed by the rules of reforms and investments total 0.75% of GDP, in addition to 0.04% for the increase in costs due to the crisis of refugees and 0.06% for expenses directly related to the security situation. Of migrants and terrorism, Italy had hoped would have hoped for more. But 0.85% – 13.6 billion – represents an “unprecedented amount of flexibility” that “no other member state has requested nor received,” remind Dombrovskis and Moscovici.