ROME, March 12 (Reuters) - Italy will have to obtain authorisation from European authorities if its plan to pay off arrears of commercial debt by public authorities leads it to breach EU borrowing limits, Economy Minister Pier Carlo Padoan said on Wednesday.
Prime Minister Matteo Renzi earlier pledged to free up funds to pay off 68 billion euros of commercial arrears by July but there has been considerable confusion about whether it can do so while still respecting EU debt and deficit rules.
Padoan said authorities did not know exactly how much would need to be paid. But he said that Italy would need clearance from Brussels if the payments caused it to overstep tight EU debt reduction rules.
“I won’t disguise the fact that we don’t have a very clear idea of how much the debt arrears which can actually be mobilised amounts to,” Padoan told a news conference.
He said that both debt payments and planned tax cuts could raise Italy’s 2 trillion euro debt, which currently amounts to some 133 percent of gross domestic product. He said the planned measures would have to be evaluated ”in a general macroeconomic context.
“And wherever there is a change in position, we would have to obtain the approval of parliament and the approval of the European Commission,” he said.