Ignazio Visco's annual address in Rome on coincided with a deadline from the EU Commission for Italy to explain why it is lagging in debt reduction. And it came as Deputy Premier Matteo Salvini, emboldened by his right-wing League party's strong gains in the weekend's EU parliamentary vote, sharpened his challenge of EU fiscal rules and announced new measures that would increase next year's budget deficit.
Visco said that raising the public deficit, as sought by Salvini, could prove counterproductive if public finances deteriorate and private sector spending contracts. He also called for economic stimulus programs, saying that the lagging economy in the south cannot only be addressed with cash handouts, a reference to a 5-Star Movement program to provide jobseekers with greater financial support.
"Holding Europe responsible for our troubles is a mistake," Visco said. "There is nothing to be gained by it, and it diverts attention from the real issues." "Italy's membership of the European Union is vital to return to a path of stable growth," he added.
He called for a "rigorous" strategy to cut Italy's persistently high debt load, now at 132% of GDP, constraining economic growth. The EU Commission earlier this week sent Italy a letter saying it had made insufficient progress toward reducing its public debt levels this year. A response from Italy is due Friday.
Visco called for well-considered tax reforms, redoubling the fight against tax evasion and improving procedures for selecting and executing big infrastructure projects.