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EU asks Italy to clarify 2015 budget

23 October 2014 21:52 (UTC +04:00)

In a letter sent from Brussels on Wednesday, Rome was asked to clarify why its financial plan for next year does not comply with European Union (EU) goals of debt reduction.

Italy's Economy Ministry said in a statement that "the government will respond to the request by tomorrow (Friday)."

European Economic Commissioner Jyrki Katainen asked to consult Italian Economy Minister Pier Carlo Padoan specifically about "the reasons why Italy plans non-compliance with the Stability and Growth Pact (SGP) in 2015," and "how Italy would ensure full compliance with its budgetary policy obligations under the same Pact" for next year.

Katainen, who is in charge of budget evaluations, wrote that Italy is planning a "significant deviation" from its previous plans towards a balanced budget in structural terms.

The request to explain why Italy's budget for next year will violate EU goals in terms of debt reduction may result in a demand for changing the financial blueprint, in case European authorities deemed Italian explanations insufficient.

The 2015 draft budget approved by Prime Minister Matteo Renzi's cabinet earlier last week provides 18 billion euros (22.8 billion U.S. dollars) in tax cuts and 15 billion euros in spending cuts.

The cabinet decided to delay the target date for achieving a structural balanced budget by a year, to 2017 from 2016, in order to boost economic growth.

It planned to reduce its structural deficit by 0.1 percent of GDP in 2015, whereas the EU had asked for a bigger effort for about 0.5 percent of GDP.

Renzi has been pressing for more expansionary measures and less austerity within the EU in order to revive European economies, especially those struggling harder after several years of stagnation. (1 euro = 1.27 U.S. dollars)