BRUSSELS (Reuters) – Eurozone finance ministers will discuss Italy's draft budget for 2019 at its next meeting on 5 November, despite Italian calls to postpone talks, an EU official told Reuters on Friday.
The Italian flag beckons over the Quirinal Palace in Rome, Italy on May 30, 2018. REUTERS / Tony Gentile
Italian government bond yields have risen since September, when the Italian Eurosceptic government announced details of a free spending budget that could violate EU budget rules and increase its high debt.
The EU's disapproval of Italian plans has contributed to the turmoil in the market, and the Italian government does not want to focus on the next monthly meeting of Eurozone finance ministers.
But delegates from other eurozone countries agreed at a meeting this week to conduct the talks nonetheless, the official said, signaling a new sign of isolation for the Italian government in the 19-country region.
The discussion follows the European Commission's decision this week to reject the Italian budget on the grounds that it deviates far from the previously agreed fiscal targets.
This decision was supported by representatives of the euro area at a meeting in Brussels this week, a second EU official said.
At the meeting on 5 November, finance ministers are expected to endorse the ambassadors' position on the Italian budget, although it is currently unclear whether there will be a joint statement on the issue at the end of the meeting, the second official said.
According to the EU rules, Italy must, after rejecting the Commission, send a revised draft of its draft budget to Brussels by 13 November.
In order to fully meet EU requirements, Italy would have to reduce its structural deficit, which excludes one-time expenditure, by 0.6 per cent. Instead, it plans an increase of 0.8 percent.
The higher deficit would help finance a lower retirement age, social spending and tax cuts to meet election commitments.
But EU officials fear that this could also increase the country's national debt, which, after Greece, is the second largest in the Eurozone, accounting for more than 130 percent of GDP.
Reporting by Francesco Guarascio and Jan Strupczewski, edited by Larry King