Renzi Adviser Pushes Back Against IMF Selloff Criticisms

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An economic adviser to Prime Minister Matteo Renzi said privatizations won’t solve Italy’s debt problem, pushing back against the International Monetary Fund’s complaint that progress on selloffs was “disappointing.”

Italy will privatize the mail service, Poste Italiane SpA, after the summer and state railway company Ferrovie dello Stato SpA next year, adviser Yoram Gutgeld said in an interview in Rome. The government has yet to decide whether to privatize the railways as a whole, or separate infrastructure from the rest of the assets, he said.

Still, Gutgeld played down the significance of the privatization program for Renzi’s broader effort to rein in Europe’s second-largest public debt pile.

“We are talking about things which are worth a few billion,” Gutgeld said. “We need to do more in certain sectors to help create more competition, but the privatizations won’t solve the debt problem of Italy by any means.”

The IMF took Renzi’s government to task on Monday over its lack of progress on privatization.

“Faster privatization would reduce debt, but progress remains disappointing,” the fund said in a statement following an official staff visit to Italy. “Privatization targets should be more ambitious.”

At a Rome briefing, Petya Koeva Brooks, who led the IMF visit, said: “Our sense is that moving back to the more ambitious targets that featured in the budget would be appropriate”

Old Commitments

Last year’s spending program envisaged raising the equivalent of 0.7 percent of gross domestic product each year from state asset sales.

Gutgeld was also lukewarm about the option of selling part of Italy’s 30.1 percent stake in oil producer Eni SpA. The shares, held directly and indirectly, are worth about 18 billion euros ($20.4 billion).

“I don’t think there is a plan right now, and financially speaking privatization doesn’t make a lot of sense,” Gutgeld said. “Right now the idea of keeping the stake is probably a good idea,” Gutgeld said.

Last month, Renzi pledged stake sales which would net a sum equaling 1.7 percent to 1.8 percent of GDP spread through 2018, according to the government’s latest budget plan.

In an attempt to trim the state budget, Renzi has entrusted Gutgeld with carrying out a spending review to cut costs and eliminate waste in public administration.

Gutgeld said the objective for next year was 10 billion euros in savings, with measures affecting health care, the real estate space occupied by state officials, and the way the administration buys its supplies.

“As of late this year or January next year, 80 percent of purchasing will go through less than 35 purchasing centers, instead of 30,000 now,” Gutgeld said. “That’s a revolution.”

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