Italy's former PM Renzi says scrapping EU Fiscal Compact "only way to grow"

Italy's former prime minister Matteo Renzi said Wednesday the only way for Italy to grow would be to scrap the current European Union (EU) deficit rules for at least five years.

In televised remarks at the presentation of his ninth book, titled Avanti (Forward), the leader of the ruling center-left Democratic Party said his proposed return to a 2.9-percent deficit to gross domestic product (GDP) ratio was "the only way to boost growth and create jobs."

Renzi, who led a reformist government from 2014 to 2016, first outlined this position in a July 9 article in the business and financial newspaper Il Sole 24 Ore.

In the article, Renzi called the 2012 EU Fiscal Compact "reckless" and said it made the Maastricht rules look like a "progressive manifesto."

"We think Italy should veto the introduction of the Fiscal Compact," Renzi wrote.

Signed in 1992, the Maastricht Treaty defines two criteria for budget discipline: the deficit-to-GDP ratio of no more than 3.0 percent, and a debt-to-GDP ratio of no more than 60 percent.

The so-called "Fiscal Compact" was signed in March 2012 and imposes penalties on countries that fail to keep their budget deficits below 3.0 percent of GDP.

Renzi also called for "a return to the Maastricht criteria for at least five years." This would free up "at least 30 billion euros (34.22 billion U.S. dollars) over the next five years" for Italian coffers, and this money should go "entirely and solely to tax reduction," Renzi wrote.

This redefinition of Italy's economic relationship with the EU forms the basis of the Democratic Party campaign platform ahead of the next general election in early 2018, according to the party's website.

Renzi also said he wanted to "get as many people as possible involved" in his Democratic Party, which he said was the only viable alternative to what he called Italy's "two populisms" -- represented by the euro-skeptic Five Star Movement and the right-wing, anti-immigrant Northern League party.

The 25-year-old Maastricht Treaty established the EU as we know it, including the single currency (the euro), the common market, European citizenship, and EU institutions -- its parliament, council, commission, courts, and central bank.

The Fiscal Compact was a treaty signed by 25 EU member states. Britain and the Czech Republic did not sign.

source: Xinhua