Stability pact, green and digital investments that Giorgetti wants to exclude from the debt calculation. What it means for Italy – Corriere.it

From our correspondent
BRUSSELS – The reform of the Stability Pact presented on 26 April by the EU Commission provides that states with a public debt/GDP ratio above 60% or a deficit above 3% put their debt on a plausibly downward path through medium-term national budgetary structural plans (the equivalent of the Pnrr), agreed with Brussels, in which governments define their budgetary objectives, measures to address macroeconomic imbalances and priority reforms and investments (green and digital transition) for a period of at least four years which could be extended to seven years if supported by specific reforms and investments. For the Minister of Economy Giancarlo Giorgetti certainly a step forward but we we had forcefully asked for the exclusion of investment costs, including those typical of the digital Pnrr and green deal, from the calculation of the target expenses on which compliance with the parameters is measured. We note that this is not the case.

Giorgetti underlines that every investment expense, given that it is significant and produces debt for the new pact, must be carefully evaluated. So only spending that actually produces a significant positive impact on GDP should be privileged. Minister Giorgetti’s words refer to what is called in the jargon golden rule, or the possibility of accounting differently for the purposes of budgetary surveillance the investments that a State makes in certain sectors. In the short term, however, the Pnrr funds destined for the double green and digital transition are also of interest because Next Generation Eu loans are calculated as public debt. Between loans and grants, the Italian Pnrr has allocated 71 billion to climate objectives and 48 billion to the digital transition. The Pnrr has a short time horizon, ending in 2026, while the reform of the EU’s economic governance is destined to last over time. Italy and the other Member States will have to continue to invest to ensure growth even when the Pnrr will no longer exist.

Hence the request by Italy and other EU countries for a golden rule for the investments necessary for the green and digital transition and for defence, in the orientation talks held with the Commission before it finalized the proposal. The Commission has replaced the golden rule with the time factor in its proposal: There are no exemptions for certain expenses – explained the EU Economy Commissioner Paolo Gentiloni -, the idea instead is to create more budgetary space by lengthening the times of fiscal adjustment. So you already have to reduce your debt very gradually compared to the current rules – he continued – but you can reduce it even more gradually if you focus on those investments. In this way, you gain fiscal space, by having three more years for your debt relief, instead of having different accounting for some types of investments. I would say that a different way – he concluded – to obtain more or less the same result as the golden rule.