EU tells Italy its coronavirus spending will not hurt compliance with budget rules

FILE PHOTO: Italy's Minister of Finance Roberto Gualtieri attends a one day Italo-Franco summit in Naples, Italy February 27, 2020. REUTERS/Ciro De Luca

ROME (Reuters) - The European Commission told Italy on Saturday that its planned extra spending to respond to the country’s coronavirus outbreak will not be counted in considering its compliance with European Union budget rules.

Italian Economy Minister Roberto Gualtieri said this week Rome would spend some 7.5 billion euros to offset the economic impact of the epidemic in Europe’s worst-hit country, raising this year’s budget deficit goal to 2.5% of national output from its current 2.2%.

“As regards the announced package of support measures, any one-off budgetary spending, incurred in relation to the response to the outbreak, would be excluded by definition from the computation of the structural balance and not taken into account when assessing compliance with the required fiscal effort under the existing rules,” European Commission Vice President Valdis Dombrovskis and Economics Commissioner Paolo Gentiloni wrote in a letter published on Saturday on the website of Italy’s Economy Ministry.

EU rules allow a temporary deviation from the deficit goals in case of exceptional events, including severe economic recession and major natural disasters.

Reporting by Giuseppe Fonte, writing by Gavin Jones, editing by Giulia Segreti and Andrew Heavens