The European Commission (EC) moved this Saturday to Italy that it will not take into account in its fiscal rules “any specific budgetary expenditure” related to the coronavirus crisis, after the transalpine country announced an upward revision of the deficit linked to Covid- 19.
“Any punctual budgetary expense incurred in relation to the COVID19 response will be excluded by definition of the calculation of the structural balance and will not be taken into account to assess compliance with the fiscal effort required according to existing standards,” said the Community Executive.
In a letter published on Twitter and addressed to the Italian Government by the Economic Vice President of the Community Executive, Valdis Dombrovskis, and by the European Commissioner for Economic Affairs, Paolo Gentiloni, Brussels also opens the door for other European Union Member States (EU) ) they take similar measures.
The EC says to take note that Italy, the main focus of coronavirus in the EU with 4,636 cases detected, will increase its deficit by at least 6,000 million euros, from the planned 2.2% to 2.5%.
The Commission adds that it is aware that this 2020 deficit figure on GDP could still vary “depending on the macroeconomic impact of the Covid-19 outbreak.”
Once Rome sends the data of the total effect of the crisis on its public accounts, the Commission will offer its analysis on May 7 regarding compliance with the stability pact by Italy.
Brussels also recalled that the EC tax rules provide for flexibility in the face of “unusual events beyond the control of the Government”, a clause in the light of which the Italian budget will be analyzed.
The Commission is “aware” that EU member states will have to implement “urgent measures to safeguard the well-being of citizens and mitigate the negative effects on the economic growth of the coronavirus outbreak,” adds the letter.
On March 16 the Eurogroup will reassess the situation of the outbreak in the European Union (EU).