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Italy euro exit is not on agenda, finance minister says

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Italy’s finance minister has said the new government was “clear and unanimous” in its desire to keep the country inside the euro, as he sought to reassure EU officials and investors about Rome’s economic policies. 

“We are not discussing any proposal to exit the euro. The government is determined to avoid the materialisation of market conditions that push us towards an exit in any way,” Giovanni Tria, told Corriere della Sera, the Italian daily, on Sunday. 

Mr Tria was making his first extensive remarks since taking office this month as part of a “ government of change” led by the anti-establishment Five Star Movement and the far-right League.

The parties, which in the past have voiced scepticism about Italy’s membership of the single currency, have a platform calling for vast spending increases and tax cuts, which puts Italy at risk of violating EU budget rules and has contributed to a sell-off in Italian assets in recent weeks.

Jitters about Italy’s commitment to the single currency’s rules have cast a cloud over efforts by Emmanuel Macron, the French president, and Angela Merkel, the German chancellor, to forge a deal on eurozone reforms ahead of a pivotal EU summit this month.

In the interview published on Sunday Mr Tria, a 69-year-old professor of economic policy, also vowed that his government would strive to reduce Italy’s debt ratio. At more than 130 per cent of gross domestic product it is seen as one of the country’s greatest sources of financial vulnerability.

“This is one of the government’s explicit goals . . . there should be no doubts,” he said.

“We are not focused on keeping our accounts in order and bringing down the debt because of what Europe tells us, but because we should not undermine trust in our financial stability.”

Friday, 1 June, 2018

Five Star and the League’s first choice of finance minister, Paolo Savona, was rejected by Italy’s president Sergio Mattarella because his views were too Eurosceptic.

It is unclear how far Mr Tria’s words will comfort EU policymakers and investors about the new government in Rome, since they imply that Luigi Di Maio, Five Star’s leader, and Matteo Salvini, leader of the League, would have to sideline or delay some spending promises.

“Tria has taken apart — one by one — the fantasy recipes on which the apprentice wizards Salvini and Di Maio have built their electoral consensus, as well as the various nonsense repeated everyday on television by representatives of the majority,” said Luigi Marattin, a lawmaker from the centre-left Democratic party, on Facebook on Sunday.

Mr Tria also expressed some caution about individual policies proposed in Five Star and the League’s platform. One is the elimination of the so-called” Fornero” pension law, which controversially raised the retirement age at the height of the eurozone crisis in 2011.

“I believe our pensions legislation can be improved, but we will do it paying attention to its sustainability — even in the long term. We will study improvements, but knowing that one cannot improvise on these issues,” Mr Tria said. 

He also dismissed the idea of paying the government’s debts to businesses by issuing short-term bonds known as mini-BOTs — a proposal that is also in the parties’ common platform.

“I believe the best way to tackle the problem is to eliminate it at the root, by ensuring the that payments are made within the expected timeframes and in money,” Mr Tria said.

Mr Tria has not yet named political appointees to his team at the finance ministry, how could further shape his views. Specific spending plans will have to be presented in annual budget proposals due in October.

On eurozone reform plans, Mr Tria said he did not see the rationale for a “European Monetary Fund” — a proposal championed by Ms Merkel, who sees it as a way to enforce fiscal discipline across the eurozone more than a tool to fight future crises.

“More generally, we will not accept measures which, even unintentionally, could cause financial instability,” Mr Tria said. “On this we will be rigid.” 

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