Tremonti Says Italian Stimulus Plan Won’t Boost Public Spending

Prime Minister Silvio Berlusconi’s government passed a 10-point plan aimed at spurring investment and growth without increasing public spending, Finance Minister Giulio Tremonti said.

The plan includes tax breaks for companies that finance research and measures to reduce bureaucracy, speed up public- works projects and remove impediments to investing European Union funds earmarked for Italy, Tremonti said.

“There is a lot in this package that will reduce red tape and create incentives for investment without relying on the engine of public spending,” Tremonti said today in Rome after the Cabinet passed the proposal.

Tremonti has avoided the kind of stimulus spending that inflated budget deficits in other European Union countries and triggered the region’s debt crisis. Italy’s shortfall declined to 4.6 percent of gross domestic product last year, half the level of Spain.

Much of the new package is focused on accelerating public- works projects that often stall because of Italian bureaucracy or challenges from local governments. Public works in Italy take twice as long to complete and cost twice as much as in the rest of Europe, Tremonti said.

The measures will also set up a regulatory authority for water services. The move is part of the government’s plan to force local governments to sell parts of their water authorities to private investors, Tremonti said.

Tremonti did not release details of the plan and said he would explain the measures at a “seminar” on May 11.

The Cabinet also approved today the extension of incentives for photovoltaic plants. The ministers did not discuss any additional budget cuts, Tremonti said. He was responding to press reports yesterday that the government planned an extra 7 to 8 billion euros ($10.3 billion to $11.8 billion) of cuts for the next two years.

--~Andrew Atkinson, Eddie Buckle

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