MILAN, April 25 Italy is now in a position to
ask the European Union to ease up on the country's deficit
target, according to Pier Carlo Padoan, chief economist at the
Organisation for Economic Cooperation and Development (OECD).
With budget cuts blamed for a second straight year of
recession in the euro zone, the EU's top economics official Olli
Rehn indicated last weekend that more flexibility on tough
economic targets was needed.
The market pressure on Italy to bring down its large public
debt burden has eased, with bond yields at their lowest in more
than two years, and prime minister-designate Enrico Letta said
on Wednesday policy had been focussed too much on austerity and
not enough on growth.
"Our country is near to achieving a very important
objective, the end of the (EU) excessive deficit procedure that
had been opened at the height of the crisis," Padoan told
newspaper La Repubblica in an interview published on Thursday.
"Italy will now be in a position to join those countries
that have some leeway with regards to their deficit/GDP limit."
His comments came amid growing resentment in Italy for the
austerity implemented by the technocrat government led by former
EU Commissioner Mario Monti, which some economists say has only
amplified an existing recession.
Still, Monti's reform drive looks set to see Italy reduce
its deficit to 2.9 percent of GDP this year and it hopes to be
removed as soon as May from the list of EU countries with a
deficit above 3 percent.
Countries subject to the so-called excessive deficit
procedure for running above that ceiling must follow European
Commission recommendations to rein in the public sector
shortfall by set deadlines.
Padoan said the OECD, long a cheerleader for the sort of
economics which have dictated Europe's largely austere response
to the debt crisis, is asking Brussels to allow all euro zone
countries some delay in reaching their deficit targets to take
into account a prolonged economic crisis in Europe.
"Countries must pursue the budget deficit reduction, but the
target needs to be stripped out of the effects of the recession.
This means it needs to be calculated in structural terms," said
Italy is expected to have a structural deficit close to
balance in 2013.
Letta said on Wednesday the European Union was "too focused
on austerity", and appealed to the Italian parliament to back
his reform efforts, including convincing the EU to change its
current policy direction.