Newsgroup: it.politica
Titolo: all'estero gia' ridono: Italy's Deficit Goals at Risk From Tremonti's Return

Italy's Deficit Goals at Risk From Tremonti's Return (Update1)
Sept. 28 (Bloomberg) -- The last time Giulio Tremonti served as Italy's  
finance minister, he met budget-deficit goals through a series of one-off  
revenue-boosting measures such as forgiving tax evasion and selling off  
government property.
The reappointment of Tremonti, Prime Minister Silvio Berlusconi's former  
accountant, is stirring concern among economists and credit-rating  
companies that he will again resort to gimmicks rather than the spending  
cuts and structural changes they say are needed to reduce the euro  
region's second-largest debt and bring the deficit back within the  
European Union limit.
``The name Tremonti is associated with creative measures, and there is a  
risk that he can go back to this kind of approach,'' said Lorenzo Codogno,  
co-chief European economist of Bank of America Corp. in London. ``And that  
would not bode well.''
Tremonti, 58, who reassumed the finance job Sept. 22 when Domenico  
Siniscalco resigned, is scheduled to unveil the government's 2006 budget  
tomorrow. With elections scheduled for next year, economists including  
Codogno say the temptation for Tremonti to avoid making politically  
painful cuts may prove too great. That, in turn, may jeopardize the  
country's deficit- reduction goals and put its credit rating at risk.
``The question is now what policy direction will Berlusconi go in?'' said  
Konrad Reuss, Standard & Poor's managing director of sovereign ratings in  
an interview Sept. 24. ``If we do see a softening of Siniscalco's  
policies, that would be very negative for the rating.''
Breaching the Limit
The 2006 budget will include 4 billion euros ($4.8 billion) raised through  
property sales and a further 4 billion euros from a clampdown in tax  
evasion. Both are one-off measures, which the government had promised to  
phase out by next year. Tremonti outlined his budget plan to local  
governments last night. The packet must be approved by the end of the  
month.
Italy's deficit will breach the European Union limit of 3 percent of gross  
domestic product for a third year in 2005. The country's debt is projected  
by the government to increase for the first time in a decade. Siniscalco,  
51, resigned as finance minister Sept. 22 partly because Berlusconi's  
coalition partners resisted $13.8 billion in spending cuts he proposed to  
help control the deficit.
Without ``decisive measures'' in the 2006 budget, Reuss says Italy's  
deficit will climb to as much as 6 percent of gross domestic produce next  
year, twice the EU limit. The government has pledged to limit the deficit  
to 3.8 percent in 2006.
Investors have already showed concern over Italy's fiscal health. The  
annual cost of credit-default swaps to insure 10 million euros of Italian  
debt for 10 years has more than doubled since April to 20 basis points, or  
20,000 euros, according to prices from Deutsche Bank AG.
Rating Cut
Under Tremonti, Italy used such measures as securitizing real estate owned  
by the Defense Ministry and changing the law so cigarette taxes could be  
raised more than once a year. Later, as deputy prime minister, he proposed  
selling off the country's beaches. Reliance on such one-time measures drew  
criticism from rating companies and the European Commission, which two  
months before his July 2004 resignation gave Italy a so-called ``early  
warning'' about its deficit.
Standard & Poor's cut its outlook on Italy's credit rating to negative on  
Aug. 8, partly on concern the budget battle would increase the deficit and  
debt, which is about 1.1 times Italy's GDP, the second highest rate in the  
EU after Greece. The rating company trimmed Italy's rating to AA- from AA,  
on July 4, 2004, the first cut for an EU nation since the euro's debut in  
1999.
The swap of finance ministers ``raises the risk that the government will  
implement looser-than-expected fiscal policy ahead of the 2006  
elections,'' putting ``further pressure'' on Italy's credit rating,  
FitchRatings said in a note yesterday.
Tremonti's Inheritance
If the elections due by May were held today, the Union coalition led by  
former European Commission President Romano Prodi would win more than 50  
percent of the vote, compared with 43.2 percent for Berlusconi and his  
partners, according to a poll of 1,542 of voters conducted on Sept. 13-15  
by the Demos-Eurisko agency for la Repubblica newspaper. The survey didn't  
give a margin of error.
Siniscalco also quit to protest the government's inability to remove Bank  
of Italy Governor Antonio Fazio for allegedly showing bias in regulating a  
bank takeover that pitted a domestic lender against a foreign bank. The  
divisions within Berlusconi's four-party coalition over Fazio has hobbled  
the legislative agenda and led to what Siniscalco, a political independent  
not affiliated with any coalition partner, called in his resignation  
letter ``absolute immobility.''
``The budget will be a huge can of worms,'' Carlo Alberto Carnevale, a  
professor of corporate strategy at Milan's Bocconi University, said in an  
interview. ``Siniscalco left because he didn't want to be compromised by a  
shoddy budget.''
Tremonti inherits a series of government pledges to the European  
Commission and Italian voters and executives. To meet the deficit  
reduction goal for next year, the government has promised to cut spending  
and raise revenue by almost 1 percent of GDP. Berlusconi said he also  
plans to cut 5 billion euros from a regional corporate tax, without  
explaining how to cover the lost revenue. Income-raising measures include  
cracking down on tax evasion, a perennial promise of Italian governments.
``This is not going to be an electoral budget, we are going to respect our  
deficit goals,'' Berlusconi said yesterday in parliament, responding to  
accusations by opposition leaders that the budget would be watered down  
with election looming in May.
http://www.bloomberg.com/apps/news?pid=10000085&sid=ayZkno2HveUA&refer=europe

 Siniscalco's policies, that would be very negative for the rating.''
Finche' ridono va tutto bene, ma se gli passa la voglia di ridere
so' cazzi amari.
Speriamo che Silvio inventi qualche barzelletta nuova...
-- 
Stardust®
«Se la maggioranza cercherà di adottare una legge elettorale senza il
consenso dell'opposizione - avverte il Cavaliere - ci opporremo con
tutti i mezzi, in Parlamento e nel Paese» «Sarebbe un boomerang che
tornerebbe addosso alla sinistra e dimostrerebbe al paese che questa
sinistra è autoritaria, antidemocratica, illiberale e addirittura
liberticida» [La Padania - 5 Ottobre 2000]