Italy’s ruling coalition has no intention of torpedoing state accounts and plans to phase in its economic program, Deputy Prime Minister Matteo Salvini reiterated on Wednesday ahead of a meeting to discuss the 2019 budget.
Investors have dumped Italian bonds in droves since the government took office in June on concerns that the coalition which comprises the League and the 5-Star Movement, may implement budget plans that would put the already-huge debt pile under strain and breach EU fiscal rules.
Prime Minister Giuseppe Conte will chair a meeting of key ministers on Wednesday to review budget priorities.
“Clearly we will not do everything in one shot, not even Italians expect that from us... If we want to run the country for a long period we cannot blow up its public accounts,” Salvini said in an interview with Il Sole 24 Ore newspaper published on Wednesday.
On Tuesday Salvini sought to calm tensions after meeting senior League politicians to discuss the budget. Their various campaign promises, including watering down pension reform and introducing a flat tax, would be phased in over the course of the five-year legislature, he said.
The priority will be given to rolling back a 2011 pension reform that raised the minimum retirement age, Salvini told Il Sole, adding that the changes could cost 6-8 billion euros ($6.9- $9.2 billion) according to some calculations.
Salvini also said that tax cuts would be implemented gradually and initially favor small businesses.
The coalition is due to unveil Italy’s latest economic growth and public finance targets at the end of the month, with the 2019 budget scheduled to be presented in mid-October.
Under European Union rules, no country should have a budget deficit that is higher than 3 percent of gross domestic product or debt above 60 percent of output. Italy’s debt pile amounts to more than 130 percent, the second highest in Europe after Greece, making it vulnerable to market pressure.
