High hopes for Italy's public spending review

English>>World

Editor's Pick

High hopes for Italy's public spending review

By Sandra Cordon (ANSA.IT) 16:57, November 25, 2013

Email|Print|Comments

twitter

facebook

Sina Microblog

Rome, November 21 - Italy can not only beat Germany in soccer but also in finding efficiencies through its national spending review, special commissioner Carlo Cottarelli said Thursday.

Cottarelli spoke in a series of interviews of his work in rooting out inefficiencies in Italian public administration in order to free up cash to finance cuts in labour taxes in order to stimulate economic growth.

"We have beaten Germany in football for 16 years, now we can easily beat them on the grounds of efficiency," quipped Cottarelli in an interview with business daily Il Sole 24 Ore.

Italy's soccer record includes major victories over Germany in 2006 when the Azzurri won the World Cup, and again at Euro 2012.

Germany has a much stronger record, however, when it comes to austerity and fiscal prudence, which it has forcefully advocated among other members of the European Union.

Cottarelli, who met with the cabinet on Thursday, said Italy will match that record as the government of Premier Enrico Letta has "high ambitions" for its spending review designed to find savings equal to 2% of Italy's gross domestic product (GDP) in the next three years.

The ultimate goal, he said, is to free up 32 billion euros by 2016, "which provides an anchor for the actions of government".

"We must strive not to be in line with the average of other European countries, but to be better than the average of the others, because we have a high public debt," he added.

The Letta government, which is struggling with a debt of around 130% of GDP, released plans Thursday to raise as much as 12 billion euros by selling stakes in several companies, including a 3% holding in oil and gas company Eni.

Letta said the proceeds from privatization would be divided, with half going to economic stimulus measures and the other half for debt reduction.

Meanwhile, most of the cash freed up by the spending review will be used for "further reduction of taxes on labour," said Letta.

Those taxes have been singled out by many as holding back economic expansion and job creation. As well, said Letta, some savings will be aimed at "productive investments and targeted public spending in areas such as research, education, culture, social spending," which faced cuts in the past.

Cottarelli, the International Monetary Fund's former head of fiscal affairs, said he returned to Italy from the IMF position "with a spirit full of hope".

His remit includes suggesting efficiencies through restructuring and better coordination of public services, scrutinizing pension payments, and further reducing such perks as chauffeur-driven limousines for officials.

Reducing the number of the so-called "blue cars" was one of the earlier cuts made in January 2012 by former premier Mario Monti, designed to yield significant savings as well as cut a potent political symbol that was resented by many.

"Symbols are important, the cuts should be for everyone, equally divided," said Cottarelli, noting that some countries such as Britain, very tightly control the number of chauffeured cars across ministries.

He joked that although he refused such a limo for his work in Italy, he did wear "blue shoes". Cottarelli said he will build on this kind of earlier work as well as efforts from working groups that have been seeking efficiencies in various ministries.

He added that he hopes citizens will become involved by "putting pressure on inefficient structures using a kind of report card on the service provided".

As well, "gold and silver-plated pensions" will be a particular target if sensitive target, he added.

Italy's public pensions for senior civil servants and officials have been slammed as excessive - in some examples, as high as 90,000 euros monthly.