MNI INTERVIEW: Italy's 2023 Budget To Be Approved On Time

The Italian government will pass its 2023 budget on time before the end of this year, avoiding any economically damaging delay in the implementation of measures including fresh support for companies and households dealing with high energy prices, Undersecretary for Labour Claudio Durigon told MNI.

While the government has found it difficult to hurry the budget bill through parliament, and has announced that it will link it to a confidence vote on Friday, Durigon dismissed fears that the process will stretch into the new year as rumours spread by the opposition.

"I remind everyone that we have been in government little more than a month," he said in an interview, pointing to narrowing yield spreads between Italian government bonds and benchmark German bunds since Sept. 25 elections as a sign of growing investor trust in the competence of the governing right-wing coalition.

Durigon, a member of the League party, called consensus views of the Italian economy for 2023 too pessimistic, adding that it has tended to exceed expectations.

"I believe that from 2023 we can expect a boost in our economy, thanks to the restarting of infrastructure projects, encouragement for investment and the structural reforms our country needs," he said, though he acknowledged that output faced a dip in the first half of the year under the impact of higher energy prices.

Italy’s government forecasts growth of 0.6% in 2023, compared to the International Monetary Fund’s projection for a contraction of 0.2%.

In its macroeconomic framework prepared for the budget, the Finance Ministry increased its forecast for next year’s fiscal deficit to 4.5% of gross domestic product, and foresaw it declining to 3.7% the following year.

MORE EUROPEAN HELP

The cost of the energy crisis will require additional help from the European Union if high prices drag on beyond March, Durigon said.

"Italy can't be left by itself to manage expensive energy prices, being among the European countries that pay the most for electricity and gas," he said, though he added that the longer-term solution will be more European energy production and supply diversification.

Energy-driven inflation is prompting Italy to press the European Union to allow changes to its EUR200 billion national recovery plan, and Durigon said that such a move was permitted under the rules of the NextGenerationEU programme and that other countries were in the same boat. (See MNI: Italy To Request EUR19Bln NGEU Tranche This Year-Sources)

"The increase in the cost of energy and raw materials have posed many difficulties in carrying out works and projects. We can't ignore it,” he said.

Italy has also campaigned for changes to the rules on public borrowing included in Europe’s Stability and Growth Pact, which is currently suspended but will come back into effect in 2024. But Durigon said there appeared to be little chance of relaxing strictures such as a limit on public debt of 60% of GDP, and that Italy would respect the rules even if it would prefer them to be changed.