A grace period that extends through the end of budgetary negotiations could be given to Italy, according to Eurogroup President Mario Centeno, who made the comments during a recent meeting in Luxembourg of the informal body of finance ministers in the Eurozone.
The Eurogroup has also discussed jobs and growth and will focus on national automatic stabilisers, while the ministers covered the prospects of reforming the European Stability Mechanism (ESM).
“It is very important to understand that the budgetary process is long. We know that there are still negotiations going on in Rome, and we have to wait for that to happen and have our answers at the end of the process,” said Centeno from Luxembourg.
The European Commissioner for Economic and Financial Affairs Pierre Moscovici commented on the bloc’s growth and stability pact rules by saying he was concerned with Italy’s draft budget that is currently the focus of discussion for the 19 Eurozone finance ministers. In its current form, the 2019 Italian draft budget clearly breaks the bloc’s budget rules.
Under EU law, the European Commission has the right to reject a draft budget from any eurozone country within 10 days after receiving the proposal by the October 15 deadline.
“A 2.4% deficit for the next three years is a very significant deviation,” said Moscovici. “The Italian government has to tell the truth to Italians, concerning the consequences of this three-year deviation to the Italian debt and economy in General. This means there’s going to be higher expenditure, but who pays?” Moscovici added.
“The Commission would be able to give an assessment in the middle of October, once the budgetary plan is submitted. But, as you know, our assessment so far is what is currently emerging is not compatible with the stability and growth pact,” said Valdis Dombrovskis, the Vice-President of the European Commission in charge of the Euro.
French Finance Minister Bruno Le Maire briefed the EU press corps extensively on his thoughts on the Eurozone’s future and how it could be affected by Italy’s decision to submit a draft plan that breaks the rules.
”All of the Member States have to do their best to stick to their commitments,” said Le Maire on Italy’s fiscal plans for the coming year.
“What is at stake now is clearly the future of Europe,” he said, urging the Eurozone members to respect common rules and to quickly agree on a reform of the eurozone as it remains unfit for a new major financial crisis. |These are pressing times for Europe and the European project,” said Le Maire.
“This is the time when the EU needs to stick together, and also a time where the EU needs to take action”. According to Le Maire, an “urgent and absolute need for a decision,” on the reform of the European Monetary Union and digital tax services. “We must find an agreement now…not doing so will be irresponsible,” he added.
The Netherland’s minister of finance, Wopke Hoekstra, although he acknowledged that the early signals are not very reassuring, but reiterated that it and it is up to the Commission to assess the draft plan while taking into account the agreed upon rules and the interest of the union as a whole while the “talks are still ongoing”.
Harris Georgiades, the post-bailout finance minister from Cyprus underlined the need for the Eurogroup to quit postponing decisions on the agenda, while adding, “Regarding Italy, we have a very clear set of rules and these rules are very important and should be observed by all of the Member States…the stability of the Eurozone depends on the compliance of such rules.”