February 11, 2019 / 1:18 PM / 5 days ago

Using Italy's gold reserves to plug budget hole an 'interesting idea' - Deputy PM

FILE PHOTO: Italy's Interior Minister Matteo Salvini gestures as he attends a news conference in Rome, Italy, January 14, 2019. REUTERS/Remo Casilli/File Photo

ROME (Reuters) - Using Italy’s gold reserves to plug budget holes could be an interesting idea, Deputy Prime Minister Matteo Salvini said on Monday after a media report said the government was considering such a move.

Earlier, La Stampa newspaper said that the government was considering using part of the country’s gold reserves, which are held by the Bank of Italy, to rein in its budget deficit this year and avoid a planned VAT increase in 2020.

“It’s not an issue that I am following, but it could be an interesting idea,” Salvini, who is also the League party’s leader, told reporters in Rome when asked about the possibility of tapping gold reserves.

Previous attempts by Italian governments to tax the gold reserves or to sell part of them to help balance the public accounts were stopped by European authorities because they would have undermined the Bank of Italy’s independence or broken public financing rules.

The talk of using the central bank-managed gold reserves comes after the leaders of the ruling coalition, formed by the far-right League and the anti-establishment 5-Star Movement, promised at the weekend to replace top officials at the Bank of Italy who they said must pay for failing to prevent bank failures.

Italian Agriculture Minister Gian Marco Centinaio, who is also a member of the League, said on Monday he had never heard anyone in the government speak about the idea of using gold reserves to plug budget shortfalls.

“I’ve never heard talk in cabinet meetings or any other political settings about getting our hands on the Bank of Italy’s gold,” Centinaio said in an interview with Radio Capital.

Italy is the world’s third-largest holder of gold reserves, behind the United States and Germany, with 2,451.8 tonnes as of last year, according to the World Gold Council.

Reporting by Massimiliano Di Giorgio and Steve Scherer, writing by Steve Scherer and Giselda Vagnoni; Editing by Raissa Kasolowsky and Susan Fenton

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