Meloni trying to hide growing public debt figures ahead of EU elections, economist says

5 months ago 23

The absence of programmatic data in the latest economic and financial document could indicate the Italian government’s unwillingness to acknowledge rising public debt before the European elections in June, former IMF director and former Senate member Carlo Cottarelli told Euractiv Italy.

Cottarelli, who resigned from his Senate post representing the centre-left coalition in May last year over differences with then-new leader Elly Schlein, suggested that the absence of formal targets could indicate disagreements within the government and a possible reluctance to reveal hypothetical increases in public debt.

“Having to acknowledge upfront, before the election, that there is an agenda to increase the national debt, perhaps, is not the most convenient thing to do,” he explained.

“With the indication of a programmatic approach, it perhaps became even more necessary to specify which measures would be taken to finance the confirmation of social contribution, tax cuts. This trend in public debt assumes that funding will be found to confirm the tax cuts Minister Giorgetti has stated the government intends to uphold.”

Cottarelli, who is also director of the Education Program for Economic and Social Sciences (Peses) at the Universitá Cattolica del Sacro Cuore, joins critics in accusing the government of using the “Super Bonus” – a tax scheme introduced by the second Conte government to mitigate the effects of the pandemic by introducing high tax deductions for homeowners who sustainably renovate their homes – as a scapegoat for not reducing public debt. According to him, the “Super Bonus” significantly impacts the public debt-to-GDP ratio, estimating its annual cost at around €30 billion.

“However, it is also true that the government has been in office for more than a year and a half. Clearly, the first attempts to block the super bonus were too modest because, within the governing coalition, there were always those who said to keep some exemptions or possibilities. The government could say ‘it’s not our fault’ a year ago,” he added.

Deadline doubts

Cottarelli also spoke about the National Recovery and Resilience Plan (NRRP), saying he disagreed with Economy Minister Giancarlo Giorgetti’s request and justification for an extension, adding that Italy was unlikely to meet all the deadlines due to its historical propensity for extensions.

“The rules are what they are,” he said, adding that Giorgetti’s failure to specify areas of uncertainty only adds to the opacity surrounding the government’s economic strategy.

“Every government must be able to articulate its project, especially one that presents itself as proudly nationalist, and it becomes a little strange to say that it fails to formulate goals,” Cottarelli said.

Even more puzzling for Cottarelli is that Giorgetti mentioned deficit targets during the recent press conference without formally including them in the document.

As for delays in implementing the investments outlined in the NRRP, Cottarelli acknowledges Italy’s sluggishness.

“I don’t think Italy will be able to meet the deadlines in all the investment projects. However, since so many of them have June 2026 as their test date, if we fail, we will only lose the last instalment,” he explained.

In discussing the possibility of extending the deadline beyond 2026, Cottarelli finds it ironic that a country that has approved the “thousand extensions” decree (designed to extend the period for which laws are valid) for 20 years and has extension in its DNA is surprised by objections to expanding the plan.

“We lent ourselves deadlines. Now, as usual, we are unable to meet them. Curious, Giorgetti said there was a war in Ukraine, but the war was in Ukraine, not Italy. Italy’s GDP in 2022, the year of the invasion, grew by 4%. It’s not a war economy, so there’s no reason to say it’s the war economy’s fault that we fail to meet the NRP deadlines. Now, we are once again asking for a postponement, a little help,” Cottarelli said.

(Alessia Peretti | Euractiv.it)