Eurogroup to Italy: “Reforms and rapid debt cut during 2024”

Brussels – Do soon, do well, but above all, do. Public accounts must be put in order, without delay, and indeed in a “rapid manner during this year” and “starting a more restrictive policy” in 2025. From the Eurogroup comes general guidance on fiscal policies, which is no small commitment for Italy, second only to Greece in public debt: debt-to-GDP ratio at 140.6 per cent projected for this year, 140.9 per cent in 2025. A trajectory of reduction and return is needed, and it is needed now. By September 20, the government must produce and file in Brussels the national debt reduction plan, and no discounts are given.

The reform of the Stability Pact and its new rules are looked at, and even more so the time when it will come into effect. The Eurogroup joint statement warns: “Based on the latest available data, the requirements of the revised economic governance framework would result in a slightly contracting overall budget for the euro area in 2025.”

Less spending then, and more attention to imbalances, subject, however, to safeguarding the priorities of the 12-star policy agenda. On the one hand, states will have to “pursue ambitious structural reforms,” while at the European level, there is a readiness “to preserve and, where appropriate, increase the level of investment, including in areas of common priority, such as green and digital transitions, as well as defence capabilities, financed through national and EU sources, including the Recovery and Resilience Instrument.”

On behalf of the government, the Minister of Economy, Giancarlo Giorgetti, signs a commitment to “improve the effectiveness, quality, and composition of public spending.” That means spending less and better. But it also commits to the timetable, which will not allow politics, Italian or otherwise, to go on vacation.

“We are heading into an interesting summer for fiscal policy coordination,” is the premise of Paolo Gentiloni, EU commissioner for economic affairs. “because we introduce, obviously after the parliamentary vote that we expect next month, this new framework of rules in a very tight timeframe.” Tight timeframes are “obviously a challenge,” from which, however, there is no escape: “We will work intensively during the summer on the medium-term plans with the member states, setting September 20 as a deadline for the submission of these plans.”

As the Managing Director of the European Stability Mechanism (ESM) explained, for Italy undersigning the Eurogroup’s joint declaration means also a clear committment in debt reduction, with tangible results to fulfil. “Member States with high level of public debt are required to produce extra-efforts to reduce debt and build fiscal buffer against shocks”, Pierre Gramegna stressed during the final press conference.