Italy must repay all the additional public borrowing it has
engaged in the fight against the Covid-19 crisis and does not need to resort to
canceling part of its public debt, the country’s foreign minister
Luigi Di Maio said.
In an interview with the Financial Times, Di Maio played down recent debate in the Italian government over the possibility that Rome could ask the European Central Bank to eliminate pandemic-related borrowing. He argued that the large public sector debt of the eurozone’s third-largest economy was sustainable.
“The goal must be sustainable debt and good debt,” he said. “There has been a big debate about the debt incurred during the pandemic. Rather, I believe that we now need to focus on spending this money in the most productive way for Italy. We must ensure that these debt investments can be repaid and that they are productive investments.
Italy’s public debt is expected to exceed 160% of gross domestic product this year due to the sharp economic contraction caused
by the Covid-19 pandemic and major recovery plans
launched by the government to combat it.
Last month, a political adviser to Prime Minister Giuseppe Conte
suggested that the ECB should consider cancel the Italian government
obligations he bought during the crisis to help the country recover.
Mr Di Maio, who as Foreign Minister is the longest-serving member of the
formerly populist anti-euro Five Star Movement in the current
coalition government, said that if Italy’s debts were to be honored,
that of the EU public spending and borrowing rulesknown as the
Stability and Growth Pact, were no longer fit for purpose.
“I believe that after this pandemic, we can no longer think about the
Stability and Growth Pact as we have done in recent years, I believe
that would be unsustainable for any country. All countries, more or
less, had to go into debt, and therefore the old parameters of the
stability pact does not work. We could even revisit the temporary
framework for state aid in certain strategic sectors.
Mr. Di Maio, 34, was previously Deputy Prime Minister in
a coalition government between the Five Star Movement and Matteo
Salvini’s Anti-Migration League party, which has repeatedly clashed with
Brussels on Italy’s budget deficit.
In October 2018, he organized an aerial victory celebration of a
balcony of the Prime Minister’s residence in Rome when the
government has agreed to increase public spending, which has
confrontation with the European Commission. In 2019, he then sparked a
diplomatic quarrel with France by meeting yellow vests protesters.
Earlier this year, Mr Di Maio resigned as leader of the Five Star Movement, which has yet to name a permanent replacement. He continues to be troubled by public disagreement between moderates such as Mr Di Maio and a more radical wing that is uneasy with the party’s support for its coalition partner, the centre-left Democratic Party.
Now Mr Di Maio says the Five Star Movement – whose MPs on
Wednesday helped the coalition government pass a parliamentary vote on
reform the European Stability Mechanism that some of its politicians
had threatened to block – adjusted its once hostile approach to Europe.
“I believe that Italy should not be left in the hands of [Hungarian premier Viktor] Friends of Orban, because what we saw on the veto for the recovery fund is putting Italy and Europe in trouble,” he said.
“The nationalism that has been in season for the past two or three years, and with which Italy still lives, is a form of national selfishness which has only continually proven to be harmful to Italy and to the European Union. .
“The Five Star Movement has become aware of its role [in Europe]and
tries to exercise it, making agreements with other politicians
realities,” Mr. Di Maio added.
“That does not mean that all is well in Europe. In effect [on] immigration and asylum, both as Italy and as a political party, we expect much more.
He congratulated the President of the European Commission, Ursula von der Leyen, for her
response to the Covid-19 crisis, and said the perception of the
The EU in Italy has improved accordingly.
“In Europe, what we have always asked for are expansive policies, not
more austerity, and a different social policy, and I must say that for
the pandemic, the reaction was there,” he said. “I’m glad that Ursula
von der Leyen apologized to Italy, she showed great sensitivity in the
first phase of the pandemic.
“There was a time when the European institutions were dispersed,
[there was] a great crisis in the perception of the European Union.
Instead, there is now a good perception of the European Union because