IMF urges Italy deal with commission
Italy should abide by European budget rules and must settle its differences with Brussels over higher state spending in talks with the EU’s executive, a senior IMF official has said.
The comments by the IMF’s first deputy managing director David Lipton came after ECB president Mario Draghi urged Italian officials to stop questioning the euro.
Italy must, today, deliver its draft budget to the European Commission but has upset Brussels with its widened deficit targets.
In our view, the Italian government should abide by the European rules and agreements,” said Lipton.
“The discussions on the draft budget must now be conducted between Italy and the European Commission,” he said. The Italian coalition has set a deficit target of 2.4% of economic output for 2019, tripling the previous goal for the heavily indebted nation, unnerving investors and prompting sharp criticism from the commission.
Mr Lipton warned that the budget dispute could delay planned reforms to make the eurozone more resilient to external shocks.
We hope that the further deepening of the monetary union will not be hindered. We consider the completion of the Capital and Banking Union to be very important,” he said.
A eurozone summit in December should bring progress, he said.
Draghi said on Saturday that Italian officials need to calm down in their budget debate as they have already caused damage to firms and households. A senior member of the coalition retorted that it was Draghi who should calm down.
Deeper eurozone integration has been backed by French president Emmanuel Macron since his election last year, but has run into opposition from Germany and its allies, wary of sharing more responsibility with less prudent governments.
EU leaders agreed in June that the ESM bailout fund should play a bigger role in a more integrated eurozone, but left the details to December and difficult issues such as a eurozone budget until a future date.
Many officials are privately concerned about the possibility of Italy sparking another sovereign debt crisis like the one triggered by Greece in 2010 that nearly destroyed the eurozone.
