EU economy chief: Italy on right path
ROME --EU Economic and Monetary Affairs Commissioner Joaquin Almunia said Monday that Italy was on the "right path" to improving its economy but must do more to improving its public finances and introduce structural reforms.
Almunia gave his assessment at a news conference after a day of meeting with Italian Premier Romano Prodi, Italy's economic minister, Tommaso Padoa-Schioppa, central bank governor Mario Draghi and other key players in the Italian economic picture.
Almunia's praise for progress so far could be a big boost to Prodi as he tries to shepherd a 2007 draft budget, including tax hikes, through parliament.
The center-left government faces stiff opposition in the task, including from some of its own coalition members.
The EU economy chief said that if Italy continues to make progress, while also enacting structural reforms aimed at boosting competitiveness and productivity, the government could reach its goal of bringing Italy's public debt below 3 percent of gross domestic product in 2007, meeting Italy's commitment to the European Union.
But to do so, Prodi's government will also have to see that budget measures are introduced "with rigor," he said.
"The situation of the public finances is a matter of serious concern," the EU official said. But he said that the information from his talks on Monday "confirms my impression that Italy is on the right path to correct this situation," Almunia said.
"According to my assessment, Italy needs sound public finances, and on top of that, structural reforms to improve their productivity levels, their competitiveness, and I hope this will be the case," Almunia told reporters.
Alumnia said he was happy about the "strong determination" that Italy's premier and economy minister were showing about strengthening Italy's public finances.
The planned euro33.4 billion ($42 billion) in revenue-raising measures have drawn criticism from unions, the country's powerful industrialists' lobby and even some government allies.
The center-right opposition, defeated by Prodi's coalition in April elections, contends the draft budget unfairly punishes the middle class through measures that include raising taxes on those who earn more than euro70,000 ($88,300) while lowering them on those with incomes of less than euro40,000 ($50,500).
Prodi defended the package in an interview published Sunday by La Repubblica daily, saying that the measures are "just and serious."
"This budget remedies the difficulties we have inherited from the center-right. And it paves the way for relaunching the economy," Prodi told La Repubblica.
The budget must be approved by parliament by the end of the year.
