October 3, 2018 / 3:51 PM / 2 months ago

No risk of default, Italy's Savona says as he pushes EU reform

STRASBOURG (Reuters) - There is “no chance” of Italy defaulting on its debts and the country is very different from Greece, Italy’s minister for European affairs was quoted on Wednesday as telling EU lawmakers.

FILE PHOTO: European Affairs Minister Paolo Savona adjusts his glasses as he holds a news conference at the Foreign Press Club in Rome, Italy June 12, 2018 REUTERS/Alessandro Bianchi/File Photo

Paolo Savona was speaking after presenting a document to Italian lawmakers in the European Parliament in which he proposes a review of the EU’s monetary and fiscal policy.

“I think there is no chance that Italy will default on its public debt,” Savona said, according to a person who attended the meeting.

Italy has the second largest debt in the European Union as a proportion of its gross domestic product (GDP) after Greece, which has received three multi-billion-euro bailouts over the past few years. Italy’s debt exceeds 130 percent of GDP.

Italy’s populist-led government said last week it planned to run a deficit of 2.4 percent of GDP next year, tripling the previous government’s target.

After the announcement triggered a sell-off in Italian assets and EU criticism, Rome said on Wednesday it would cut its deficit from 2020.

Savona, who was his government’s original pick as economy minister but vetoed by Italy’s president due to his critical opinion of the euro, said he had presented to EU lawmakers a document in which he proposed “to reassess the European monetary and fiscal policy in an integrated manner”.

Savona was referring to a document he posted on his ministry’s website a month ago.

In that paper he called for the public debt of all euro zone states to be brought below 60 percent of gross domestic product, via long-term restructuring underwritten by the European Central Bank.

Savona also said Italy was very different from Greece, in an apparent reaction to remarks made by European Commission President Jean-Claude Juncker.

Juncker warned Rome this week against following a fiscal policy that he said could cause a financial crisis like the one experienced by Greece over the past few years.

Writing by Francesco Guarascio; editing by Philip Blenkinsop and Gareth Jones

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