ECB’s Visco Says Italy Must Spend EU Money Well, Cut Debt Burden
(Bloomberg) - Italy needs to spend its recovery fund money well to create growth and reduce its debt burden, Bank of Italy Governor Ignazio Visco said.
"Italy's debts are sustainable, the problem is the debt burden," said Visco, who also serves on the European Central Bank's Governing Council, in a Bloomberg Television interview with Francine Lacqua on Friday. "I'm fiscally confident, the real problem was the ability to grow."
Italy is to receive up to 209 billion euros from the European Union's recovery fund. Prime Minister Giuseppe Conte's government draws up plans for the use of the funds. The draft guidelines put forward by Bloomberg suggest that the government is trying to double growth and increase employment by 10 percentage points in the long term to close the gap with European counterparts.
Italian debt is growing by almost 160% of production this year. In the worst case scenario of the government, gross domestic product fell 10.5% in 2020 and rose by only 1.8% in the next year.
ECB support and government incentives have helped the Italian economy, and Visco said the bank had "seen better data than expected for the third quarter".
The ECB's efforts to keep borrowing costs down have allowed Italy to spend € 100 billion on boosting its troubled economy. The yield on Italian 10-year bonds has more than halved since the peak of the pandemic in mid-March.
Visco said the ECB's support has helped the European economy and it is important "to consider the conditions under which the exit will be safe". He said it would be a topic for the Group of 20 summit that Italy would host next year.
"We won't be going back to a pre-Covid situation for at least a few years," he said.
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