September 13, 2019 / 5:43 AM / a month ago

Italy calls for looser EU fiscal policy to spur green investment: paper

MILAN (Reuters) - The euro zone needs a more supportive fiscal policy, Italy’s new economy minister said in a newspaper interview on Friday, adding that spending on green investments should not count towards a country’s budget deficit.

Italian Finance Minister Roberto Gualtieri looks on during the swearing-in ceremony at Quirinale Presidential Palace in Rome, Italy September 5, 2019. REUTERS/Ciro de Luca

Roberto Gualtieri, the former head of the European Parliament’s economic and monetary affairs committee, told daily la Repubblica that the new government would not challenge European Union budget rules but would seek to change them.

“I’m going (to Helsinki) to discuss European policies, starting from the need of a more expansionary fiscal policy,” he said ahead of Friday’s euro zone finance ministers’ meeting in Finland.

Sources have told Reuters Italy’s new government plans to raise its budget deficit to around 2.3% of economic output next year.

“We support the idea of a Green New Deal ... based on public and private investments. In this context, the portion of domestic financing ... should be excluded from structural deficit calculations,” Gualtieri added.

The structural deficit is adjusted to take into account the economic cycle and one-off items.

French Finance Minister Bruno Le Maire on Friday urged the EU to define clearly what qualifies as green investment.

Gualtieri said defraying a scheduled sales tax hike would be the priority for the upcoming 2020 budget, while the timeframe for proposed tax cuts for lower-income workers and companies that invest to innovate would be three years.

He pledged to reduce Italy’s 2.3 trillion euro public debt, so as to further lower its cost, by fighting tax evasion and reviewing tax expenditures.

Italy’s borrowing costs have fallen sharply in recent weeks as a new coalition comprising the centre-left Democratic Party and the 5-Star Movement (M5S) replaced a government made up of the M5S and the right-wing League.

“We’ve paid very dearly in terms of interest payments on the debt, lower confidence and investments as well as Italy’s loss of influence in Brussels due to the League’s ambiguous and conflictual relationship with Europe,” Gualtieri said.

“Clashes with Europe, slogans on social networks and the boycotting of negotiating tables are over.”

Reporting by Valentina Za; Editing by Richard Borsuk and Catherine Evans

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