Italy's Tria says Rome will spend less, can avoid EU action on deficit


By Tommy Wilkes and Dhara Ranasinghe

LONDON, June 18 (Reuters) - Italy can avoid disciplinary action from the European Commission over its spending plans by sticking to its current budget deficit target but Rome will need to cut spending rather than hike taxes, Economy Minister Giovanni Tria said on Tuesday.

The European Union looks increasingly likely to impose disciplinary procedures on Italy over the management of its huge public debt, after inconclusive meetings on Friday between the Italian finance minister and his EU partners.

An unexpected slowdown in growth last year had meant Italy could not comply with European Union fiscal rules, but a rise in tax receipts and lower-than-expected spending on social welfare programmes in 2019 showed that Italy was on the right track.

"We are going to have the commitments approved by parliament," he told Reuters on the sidelines of the conference when asked if Rome would need to introduce new commitments to avoid disciplinary action by Brussels.

"For the next year, we have to indicate which of the instruments (to use)," Tria said, adding he preferred cutting spending rather than raising taxes to meet a budget deficit target of around 2.1% of GDP.

Tria also asked investors to avoid the "noise" coming out of the ruling coalition in Rome, in which populist parties from the far-right and left govern in an uneasy alliance, and instead focus on the actual spending commitments from the government.

Deputy Prime Minister Matteo Salvini was reported by media as saying on Tuesday that Rome would press ahead with plans for "mini-bots" unless a better solution was put forward.

But in London Tria, seen as a moderate, said the notion of "mini-bots" was not on the government's agenda. "We don't need this kind of instrument," he said.

The mini-BOTs, named after short-term bills or BOTs, are a proposal by Salvini's far-right League party. They have raised concerns among investors that they could become a parallel currency.

"We don't want to create problems in Europe. We have to reinforce the trust in investors in Italy's financial situation," Tria said.

This article appears in: Stocks , World Markets , Economy , Politics

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