Italy is changing radically, and offers a good example for others to emulate, its finance minister Vittorio Grilli told the EP Economic and Monetary Affairs Committee on Monday. He pledged to deliver a balanced budget by the end of the year and repeatedly said that market trust was the primordial factor for returning Italy to calmer waters.
Mr Grilli followed his counterparts from Belgium, Hungary, Spain and Greece, in fielding MEPs' questions, under a system set up by the EU "six pack" rules which allows the committee to invite finance minsters of "excessive deficit" countries to explain their economic policies. Ireland's Michael Noonan will be next up, this Wednesday afternoon.
Asked about how Italy's reform programme was set to continue and the merits of a strong focus on austerity, Mr Grilli replied that the government would not be opening new "reform worksites". Instead, it would deepen reform in areas where work was already under way, in particular liberalisation and improving competitiveness.
Italy's fiscal framework and public spending situation were in good order, as could be seen in the very good health of its pension system, he continued.
Austerity was not a choice for Italy, but an obligation, Mr Grilli repeatedly told MEPs. "The room for manoeuvre was simply not there. Market trust had to be a priority. There is no sustainable growth without market trust. Even the speed of the reforms was inevitable. They have been tough, but were unavoidable", he said, noting that the EU's lack of tools in the early stages of the crisis had left Italy with even less choice as regards the type of policy to adopt.
Some MEPs urged Mr Grilli to refrain from raising expectations that Italy could balance its budget by the year's end, warning that this would probably not be achievable. He replied that the government's aim was a cyclically balanced budget, not a nominally balanced one - meaning that if growth forecasts were not achieved, then the balanced budget target would need to reflect this.