Rome, November 18, 2017 - 16.57
  • Share
  • Send link by email
  • Share on Facebook - external website - new browser window
  • Share on Google+ - external website - new browser window
  • Share on Twitter - external website - new browser window

Italy's Stability Programme

You are in: Home English Version > Public Finance > Italy's Stability Programme

Italy's Stability Programme

Article 4 of European Council Regulation no. 1466/97 of 7 July 1997 provides that, at the beginning of each year, Member States participating in the single European currency are obliged to present a Stability Program to the Council and to the European Commission. The program must update the previous year's program. The objective of the program is to implement nationally the Stability and Growth Pact agreed to at the European level and intended to implement the single currency and to homogenise the economic policies of the Member States participating in the euro.

As is known, the Stability Pact provides for the gradual reduction of the ratio between deficit and gross national product and the reaching of a ratio between the latter and total indebtedness of not more than 60%. In order to achieve these objectives, Italy has committed to keep the level of primary surplus constant (net of interest charges) at 5%. The aim of the national program is to define the interventions on public finance and economic policy that must be adopted in order to reach this objective, taking into consideration that, if it is not reached, the sanctions provided in the Stability Pact could be imposed and could amount to fines equivalent to a half-point of GNP for defaulting countries.

The Italy's Stability Programme consists of a document intended primarily for the European Union. For this reason, it is prepared by the Government and made known at the European level but is not debated by Parliament. However, given that pursuit of the objectives in the document is a major undertaking with respect to the economic-policy choices that Parliament must approve and that such efforts are not negligible when it comes to understanding the consequences of the effects of budget decisions and to identifying the new objectives and commitments required by participation in the single currency, it is indispensable that Parliament participate in these choices.

Given the current reporting system within the European Union, it is not, however, the national parliaments that assume direct commitments with the Union but rather the respective governments. It is therefore the Italian government that assumes responsibility for committing to and pursuing European objectives but, in order to realise those objectives, legislative measures and economic-policy choices must be adopted that require parliamentary approval. It is therefore indispensable that Parliament share the Government's choices. Obviously, in cases in which such choices coincide with those illustrated in the economic and financial programming document, there is no need for Parliament to be asked to take a new position in their regard.

In cases, on the other hand, in which such choices differ from those in the economic and financial programming document, the Government is required to introduce to Parliament with a briefing note in which the new estimates of macroeconomic indicators and balances are justified. This note is, however, optional and becomes mandatory only in the cases of variations with respect to the forecasts in the EFPD. It also has a factual value, although Parliament, when it considers so doing appropriate, has the right to follow up examination of the note with the approval of a decision. The related decision is an essentially analogous if less substantial procedure with respect to that with which Parliament adopts the decision approving the EFPD. By means of this procedure, Parliament can ratify the contents of the briefing or issue directives to the Government having not so much to do with the objectives, which are decided upon at the European level, as with the instruments by means of which the objectives can be achieved.