In a letter to the European Commission on October 30, Italy defended its 2018 budget. It said Brussels did not recognise the extent of its efforts because it used different calculations.
Last week, the EU executive said the structural adjustment planned by Italy, which has the euro zone’s second-highest public debt burden relative to its output, was below what is required.
As reported by The New York Times, Italy pledged to cut its structural deficit by 0.3% of gross domestic product this year. The European Commission, however, said its latest fiscal package showed a cut of just 0.2%.
Economy Minister Pier Carlo Padoan disputed this in the letter sent to Commission Vice President Valdis Dombrovskis and Economic and Financial Affairs Commissioner Pierre Moscovici.
“The difference of 0.1 percentage point in the estimated fiscal effort for 2018 according to the Commission’s estimates is due to a different assessment of the cyclical conditions of Italy, that is, to the… output gap estimate.”
Padoan argued that housing migrants, who have poured across the Mediterranean from Libya in recent years, requires extra spending.
As explained in Italy’s letter, there were more than 193,000 people living in migrant reception facilities across the country at the end of September 2017, compared with 176,000 at the end of 2016.