ROME, Dec 29, 2018 (BSS/AFP) – Italy’s populist government was racing
Saturday to get a revised 2019 budget through parliament before year end
despite complaints it was written by Brussels and being rammed through
without debate.
Key measures in the big-spending budget have been watered down as the
government tries to avoid being punished by the European Commission and the
markets.
Senators passed the draft last week in a vote of confidence that avoided
discussing around 700 amendments put forward by the anti-establishment Five
Star Movement (M5S) and the anti-immigration League coalition but provoked
acrimonious scenes over the lack of substantive debate.
Similar scenes were repeated on Friday in the lower house, where the
session was suspended after copies of the budget were thrown around, and the
government will again resort to a vote of confidence on Saturday or Sunday.
If next year’s budget is not passed before December 31, the government
will continue to function on a monthly basis using the 2018 budget.
“There was no deliberate wish by the government to avoid discussion,”
Prime Minister Giuseppe Conte told an end of year press conference on Friday
as the opposition Democratic Party filed a complaint with the Constitutional
Court over the sidelining of parliament.
Conte, a lawyer, is not a member of either of the ruling parties and has
worked to achieve compromises between the parties and with Brussels since the
government was formed in June.
In a historic first, in October the European Commission rejected Italy’s
big-spending budget, which promised a universal basic income and scrapped
pension reform.
But Italy last week agreed to reduce the cost of both of its landmark
measures, and is now committed to not adding to its colossal two-trillion
euro debt load next year.
In the latest hiccup to the tightly balanced revised budget, charities
were on Thursday up in arms over a sudden decision to double their tax rate
from 12 to 24 percent.
M5S leader and Deputy Prime Minister Luigi Di Maio bore the brunt of
criticism as he had said the budget would “end poverty”.
He said there was no time to remove the measure before the end of the year
and so the law would have to be changed again in January.
Deputy Prime Minister Matteo Salvini’s League has also had to climb down
on costly pension reform.
The government has struggled to come up with a budget that pleases their
voters, Brussels and the market, with many Italians complaining about
measures being watered down to placate the European Commission.
The EU and Italy negotiated intensely with both sides worried that a
protracted feud would alarm the markets and ignite a debt crisis in the
eurozone’s third biggest economy.
Without the compromise, Italy would have ultimately faced a fine of up to
0.2 percent of the nation’s GDP after a long and rancorous process with its
eurozone partners.
The talks centred on the so-called structural deficit, which includes all
public spending minus debt payments.
Italy’s first budget was set to blow through commitments made by the
previous government, and require Rome raising even more debt.
Last week’s deal anticipates that this will now be balanced, with the
overall deficit target lowered to 2.04 percent of GDP.
“It’s not at all true that the budget was written in Brussels, it was
written in Italy,” Conte insisted on Friday.
Italy’s public debt is a big problem and now sits at a huge 2.3 trillion
euros ($2.6 trillion), or 131 percent of Italy’s GDP — way above the 60
percent EU ceiling.