Italy’s economy minister threatens to quit

Italian Economy Minister, Fabrizio Saccomanni, will resign if the fragile coalition government flouts European Union deficit spending limits in favor of tax cuts, he told Corriere della Sera newspaper on Sunday.

Reuters reported that the departure of Saccomanni, a former high ranking Bank of Italy official who is not affiliated to a political party, would be a blow to Italy’s credibility with financial markets as it battles to emerge from its longest recession in six decades.

Italy’s accounts are heading toward overshooting the EU deficit limit this year, Saccomanni said on Friday, just months after the country was taken off a black list for running excessive budget gaps in the past.

While the minister said he would do all it takes to keep the deficit below the three per cent of output ceiling, senior coalition members have pledged to go ahead with tax cuts amid a growing sense that a national election may be just a few months away.

“Promises must be kept, otherwise I’m not staying,” Saccomanni was quoting saying in an interview with Corriere. “I must defend my credibility, and I have no political ambitions.”

Prime Minister Enrico Letta’s government has been in near constant turmoil since it was formed five months ago by the country’s two biggest parties, traditionally bitter rivals.

Letta’s Democratic Party and Silvio Berlusconi’s Forza Italia agreed to govern together after an inconclusive national vote in February, but both sides appear to be mulling an early vote as a way out of the awkward alliance.

“I’m not going to make a desperate search for a billion euros if in February there’s going to be a vote,” Saccomanni was said to say in the Corriere, explaining that reforms and the management of the public accounts required political stability.

To meet the EU deficit target, Saccomanni needs €1.4bn and he indicated a one-per centage-point increase of the main sales-tax rate of 21 per cent scheduled for October 1 cannot be cancelled without worsening the public accounts.

The economic policy impasse comes at an especially bad moment for the coalition. Berlusconi is reeling from a definitive conviction for tax fraud last month and an impending vote to strip him of his Senate seat, and the PD is torn by an internal power struggle between Letta and Florence Mayor Matteo Renzi, with a primary vote to pick a new leader set for December 8.

Letta is travelling to the United States and Canada this week, but will return Friday to preside over a cabinet meeting where a decision over the sales-tax increase must be taken.

Saccomanni toned down his threat later on Sunday in comments from the sidelines of a conference in Tuscany.

“The moment has come to have a calm and serious debate over the public accounts,” Saccomanni said in comments broadcast by SkyTG24. “Italians deserve to know exactly how things stand instead of hearing only slogans and propaganda.”

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