The programmatic scenario of the Def for the three-year period 2017-2019 "cannot be said to be implausible on the basis of the current economic situation, but the risk of less favorable developments remains". This was stated by the Deputy Director General of the Bank of Italy, Luigi Federico Signorini, during the hearing in Montecitorio on the 2016 Economic and Financial Document, before the Budget Committees of the Chamber and the Senate. “Geopolitical tensions – he underlined – could have repercussions on the confidence of families and businesses. The financial markets remain subject to high volatility”.
ASSET TARGET DEBT REDUCTION BUT MARGINS ARE NOT WIDE
According to Signorini, “the Def has defined the reversal of the dynamics of debt with respect to GDP as a 'strategic objective of the Government'. It is a positive and important fact that, despite the worsening of growth projections, the objective of starting debt reduction starting this year has been confirmed. But the margins are not large. If we want to maintain and consolidate market confidence, it is important to achieve clear, visible and progressive debt reduction over time".
EVALUATE PERMANENT TAX CUT FOR EMPLOYMENT
The Deputy Director General of the Bank of Italy also maintains that “the opportunity to envisage permanent reductions in the tax wedge to the benefit of employment growth will need to be carefully considered. The new regulation has made a not negligible contribution to the expansion of employment, grafting onto the thrust attributable to the cyclical recovery and lower labor costs deriving from the tax relief. According to our estimates, the revision of the regulation of employment relationships has contributed, like the decontribution in force since January 2015, to doubling the probability that a fixed-term contract will be converted into a permanent one".
FISCAL PRESSURE REMAINS HIGHER THAN THE AVERAGE OF THE PREVIOUS DECADE
Signorini then pointed out that "the tax burden, which decreased from 43,2% in 2014 to 42,9% in 2015, nevertheless remained higher, by around 2,5 percentage points, than the average recorded in the decade preceding the debt crisis sovereigns".
OK STOP SAFEGUARD CLAUSES BUT STRICT MEASURES ARE NEEDED
As for the deactivation of the safeguard clauses, “it is acceptable – he added -, given the recessive effect that they could have in a phase of weak recovery. The clauses do not represent an absolute commitment, however if repeatedly disregarded they can increase uncertainty. There is no alternative to rigorous and effective interventions on income and expenditure”.
NECESSARY TO MAINTAIN CLOSE MONITORING OF PUBLIC ACCOUNTS
“In the framework of the Def, which includes an ambitious privatization programme, the minimum rate of nominal growth of output which allows the debt-to-GDP ratio to fall in 2016 is around 2%, not much below 2,2 inclusive in the programmatic scenario. To guarantee the achievement of the objective it will therefore be necessary to maintain close monitoring of the public finances during the year, also in connection with the evolution of the macroeconomic situation”, concluded Signorini.
