Italian Prime Minister Mario Monti said new European Union rules forcing governments with excessive debt to reduce it to within an acceptable level have “elements of flexibility” that may make the regime less of a burden.
The rule forces countries with debt over the EU limit of 60 percent of gross domestic product to cut that excess by 5 percent a year. Currently the nominal value of Italy’s debt over that limit is almost 900 billion euros ($1.17 trillion), meaning the government would have to achieve debt reduction of 45 billion euros a year.
The rules adopted unanimously by EU countries are a “burdensome constraint,” Monti said in testimony in the Italian Senate today in Rome.
They also contain language “respecting temporary guarantees and elements of flexibility that Italy’s previous government had lobbied to be taken into account,” he said.
Monti, who has been in power since November, said his government’s position on the rule was in “absolute continuity” with the previous government of former Prime Minister Silvio Berlusconi.
Berlusconi and his finance minister, Giulio Tremonti, had pushed the EU to accept a broader definition of debt to include private debt levels, which in Italy are among the EU’s lowest. That would reduce Italy’s total debt level and make the rule less onerous.
Monti said there are signs the debt turmoil is easing and the “contours of a way out from the euro crisis are starting to take shape.”
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