Speaking in Rome, Visco said that increasing government bond yields in recent months would cost the state about € 5 billion next year if yields do not return to previous levels.
“Italy’s national debt is sustainable, but there must be a clear determination to keep it that way,” he said.
“Uncertainty about Italy’s committed participation in the European Union and its commitment to a single currency should be dispelled,” he added.
Last week, the European Commission rejected Italy’s draft budget. A negative conclusion means that the executive body of the EU is asking the Italian government to review and resubmit its budget plan.
Italy set a budget deficit target of 2.4% of GDP in 2019 (three times the previous target), 2.1% in 2020 and 1.8% in 2021
The target ratio of debt to GDP is set at 130.9% in 2018, 130% in 2019, 128.1% in 2020 and 126.7% in 2021
According to EU rules, the country's budget deficit should not exceed 3% of GDP, and public debt should be no more than 60% of GDP. Although the planned Italian budget deficit is less than 3%, its increase compared with the previously agreed level has caused dissatisfaction with the European Commission.
Rome is given three weeks to make changes to its spending plans and resubmit them to Brussels. However, the Italian government stated that it did not intend to change its plans.
The standoff between Rome and Brussels has been worrying the markets for several months. Against this background, the spread between the yields of 10-year government bonds of Italy and Germany has reached a five-year maximum. Earlier this month, Credit Suisse AG warned that the Italian banking system would be under pressure if the spread exceeds 400 basis points.
The head of the European Central Bank, Mario Draghi, last week expressed confidence that an agreement between Italy and the European Commission on the country's budget will be reached, but he acknowledged that the increase in the yield of Italian government bonds could harm the country's banks.
source: reuters.com
“Italy’s national debt is sustainable, but there must be a clear determination to keep it that way,” he said.
“Uncertainty about Italy’s committed participation in the European Union and its commitment to a single currency should be dispelled,” he added.
Last week, the European Commission rejected Italy’s draft budget. A negative conclusion means that the executive body of the EU is asking the Italian government to review and resubmit its budget plan.
Italy set a budget deficit target of 2.4% of GDP in 2019 (three times the previous target), 2.1% in 2020 and 1.8% in 2021
The target ratio of debt to GDP is set at 130.9% in 2018, 130% in 2019, 128.1% in 2020 and 126.7% in 2021
According to EU rules, the country's budget deficit should not exceed 3% of GDP, and public debt should be no more than 60% of GDP. Although the planned Italian budget deficit is less than 3%, its increase compared with the previously agreed level has caused dissatisfaction with the European Commission.
Rome is given three weeks to make changes to its spending plans and resubmit them to Brussels. However, the Italian government stated that it did not intend to change its plans.
The standoff between Rome and Brussels has been worrying the markets for several months. Against this background, the spread between the yields of 10-year government bonds of Italy and Germany has reached a five-year maximum. Earlier this month, Credit Suisse AG warned that the Italian banking system would be under pressure if the spread exceeds 400 basis points.
The head of the European Central Bank, Mario Draghi, last week expressed confidence that an agreement between Italy and the European Commission on the country's budget will be reached, but he acknowledged that the increase in the yield of Italian government bonds could harm the country's banks.
source: reuters.com