Central bank warns: Debt in Italy about to explode

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The Italian central bank is demanding that the government in Rome acts fast because the countries debt is getting out of hand. The state debt is already at 133 percent of the GDP. The Maastricht criteria, however, actually limit this debt to 60 percent of the GDP.

Central bank warns: Debt in Italy about to explode

This article originally appeared at DWN, exclusively translated for South Front by Frank Jakob

The Italian central bank is demanding more efforts by the government to lower the countries enormous debt. Italy should use the “extraordinarily convenient” current market conditions, according to a statement issued on Friday in the newest economic report of the central bank. Italy is currently recovering from a three yearlong recession. The country currently pays very low interest rates for lending more money due to the current policy of the European Central Bank, which is buying bonds of crisis stricken Euro countries. However, the government lowered its spending in the 2016 household much less than it previously intended.

The state debt will reach roughly 133 percent of the countries gross domestic product. Only Greece is worse off in the Eurozone. According to Maastricht-criteria this number is limited by contract to 60 percent. As a reminder: Maastricht was a contract that was created by the EU member states. It was to be expected that everyone who signed the document would actually abide to it.

France convinced the European Commission to overlook higher deficits until after the presidential elections.

Italian Prime Minister Renzi at least was able to push through a statement this week: The Italian state agreed to a constitutional reform on Tuesday which would drastically limit the political power of the second chamber of parliament. This would lower the number of senators from 315 to 100. Additionally in the future only the House of Representatives will get to elect the Prime Minister and the possibility of the senate to block laws would be greatly decreased.

Renzi is not aiming to tighten the belt of the state with his constitutional reform: The new constitution is giving him more power because he can more easily pass laws. Yet to pass the reform he still needs the vote of both chambers of parliament, which will take place late in 2016. People that oppose the reform have therefore still time to torpedo Renzi’s plans. Even after the reform has been accepted by parliament a referendum is needed to second the decision.

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