MILAN, May 20 (Reuters) - Investor confidence is key for the sustainability of Italy’s 2.3 trillion euro ($2.6 trillion) debt, which limits Rome’s room for manoeuvre, Economy Minister Giovanni Tria said on Monday.
Speaking at a conference organised by Rome’s LUISS university, Tria however said this did not mean that Italy should necessarily pursue a balanced budget.
He said it was time for the European Union to tackle the “taboo of monetary financing” of governments’ deficits so as to allow the European Central Bank to finance much-needed public investments and spur growth.
“Italy must recover ... fiscal room which is not determined by European rules but by confidence, meaning investors’ willingness to buy public debt,” Tria said.
“Such fiscal room depends on how we will use public spending and steer its composition towards investments ... (if we do this) I believe such fiscal room could grow and would not necessarily need to be linked to the myth of a balanced budget.”
$1 = 0.8958 euros Reporting by Giuseppe Fonte and Valentina Za