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Italy Has Days to Avoid EU Action as Ministers Show Urgency

Italy Has Days to Avoid EU Action as Ministers Show Urgency

(Bloomberg) -- Italy has “days” to come up with a plan to get its finances back in order, French Finance Minister Bruno Le Maire said on Friday, in comments that signaled impatience with Rome’s defiant fiscal policy.

Euro-area finance chiefs meeting in Luxembourg this week have heaped pressure on Rome to come up with new budget measures, after the European Commission said an infringement process was warranted over the country’s failure to rein in its debt.

Italy Has Days to Avoid EU Action as Ministers Show Urgency

Not taking sufficient measures would pave the way for a decision at the next finance ministers’ meeting, set for July 9, to formally trigger the censure. That could result in financial penalties.

“It’s a few days, not a few months,” Le Maire told reporters. “The faster Italy gives answers to the commission the better it will be.”

Dialog Starting

Italian Finance Minister Giovanni Tria sought to strike a conciliatory note in Luxembourg, saying the “foundations” of a dialog had been laid and that deficit targets will be respected “without changes in the laws.” Still, he admitted "there are no new official documents to put out to demonstrate what we’re doing.”

Tria’s colleagues are skeptical. “The Italian finance minister told us not to worry, they will get more solutions, and respect the rules and goals we set together,” Luxembourg Finance Minister Pierre Gramegna said. “That has to be probed. Then we will see. So in the next few weeks we should have something more concrete.”

Even if a formal disciplinary process is launched, it’s up to the commission to decide by the end of July whether Italy’s deviation from the bloc’s fiscal rules is enough to warrant an initial penalty of as much as 3.5 billion euros ($4 billion), in the form of a “non-interest bearing deposit.”

“With all my heart I hope our Italian friends will find a path to get an agreement with the commission,” Le Maire said. “Concrete proposals need to be seen and it will be up to the commission to examine them.”

Six More Months

If the disciplinary process is enacted, Rome would be given up to six months to take corrective measures or face additional penalties. Meanwhile, the deputy premiers who run Italy’s populist government continue to go off-script.

The 2020 budget must include a “substantial tax cut,” Deputy Premier Matteo Salvini said in a radio interview Friday, ripping into the EU for “economic rules which have failed.” Salvini also returned to the theme that Italy gives more than it gets back, saying “it’s strange to be given lessons” by the bloc.

Commission Vice President Valdis Dombrovskis said on Thursday that Italy needs a “substantial correction” to its fiscal trajectory if it wants to avoid sanctions.

--With assistance from Nikos Chrysoloras, Viktoria Dendrinou, Joao Lima and Maria Tadeo.

To contact the reporters on this story: Alessandro Speciale in Rome at aspeciale@bloomberg.net;William Horobin in Paris at whorobin@bloomberg.net

To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net, Jerrold Colten, Richard Bravo

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