Italy still dogged by 'excessive imbalances' says EC

(ANSA) - ROME, MAY 23 - The European Commission said Monday that Italy continues to be dogged by "excessive imbalances" on the macroeconomic front in its 2022 European Semester Spring Package.
    "Italy's economy is facing vulnerabilities relating to high government debt and weak productivity growth, as well as fragilities in the labour market and some weaknesses in the financial market," the Commission said.
    "Italy's public debt ratio remains high, in part due to persistently weak GDP growth, and remains a risk for fiscal sustainability and the financial sector".
    On the positive side, the Commission said Italy's the reforms and investments of Italy's post-COVID Recovery and Resilience Plan (RRP), which is being funded with the help of almost 200 billion euros of EU grants and low-interest loans, "are expected to contribute to reducing macroeconomic imbalances.
    "The implementation of reforms and investments is set to gradually boost productivity and growth," it said.
    "A prudent and effective management of government finances, both on the expenditure and on the revenue side, as well as an effective implementation of the investments and reforms included in the RRP to foster growth, remains crucial to better allocate public resources and achieve a sustainable fiscal adjustment".
    The Commission also confirmed on Monday that it was extending the general escape clause of the Stability and Growth Pact through 2023, saying this was warranted by the "heightened uncertainty and strong downside risks to the economic outlook in the context of war in Europe, unprecedented energy price hikes and continued supply chain disturbances".
    However, Economy Commissioner Paolo Gentiloni warned that this must not be considered the green light for "a return to unlimited spending". (ANSA).