Italy’s finance minister, Pier Carlo Padoan, says the extra expenditure on coping with earthquakes and the refugee crisis in Italy will amount of between €6.6 billion and €7 bn in 2017.
The expenditure should justify Italy being allowed to reduce its deficit reduction in 2017, since the Italian government’s position has hardened in recent days. The country’s prime minister, Matteo Renzi, has put his political future on the line by making it depend on winning a referendum in December endorsing institutional reform.
"The Italian economy is still experiencing difficult cyclical conditions and thus suggests a more gradual adjustment toward the medium-term objective, which remains a balanced structural budget in 2019", said the minister in his response to requests for clarification about Italy’s draft budget for 2017 requested by the European Commission (which asked for similar clarifications from a further six members of the eurozone) (see EUROPE 11655).
Next year, the Italian government is planning to mobilise €2.8 billion for reconstruction after the earthquakes in the centre of the country, including €2 bn for an anti-earthquake construction plan. Padoan says 42,000 schools need structural repairs.
Rome highlights its critical role in protecting the EU’s external borders and the exceptional nature of its financial contribution to allowing the EU to respect its humanitarian obligations by rescuing lives at sea. The number of migrants arriving in Italy in 2016 is higher than that noted after the Arab Spring in 2011-2012, explain the Italian authorities. Spending on rescue operations, providing first aid, housing and education for more than 20,000 unaccompanied children is estimated at €3.3 billion in 2016 and €3.8 bn in 2017. If the number of migrants continues to increase at the current rate, spending will increase to €4.2 bn, warns the government in a letter published on the Italian economy and finance ministry's website. It points out that Italy, unlike other EU countries, does not include the cost of social integration of migrants since they are not directly related to management of the EU’s external borders.
Italy’s draft budget for 2017 provides for a deficit of 2.3% of GDP, below the 3% cap laid down in the Stability and Growth Pact, but above prior commitments made by the Italian authorities to cut it to around 2% (see EUROPE 11652). (Original version in French by Mathieu Bion)