Visco calls on efficient use of budget savings

Italian central bank governor Ignazio Visco on Friday urged Italy to speed up growth policies starting from valuing at most the budget savings ensuing from termination of a European procedure for excess deficit. Over the past 25 years, Italy has failed to respond to deep changes in the global market place and must now act fast to catch up, Visco told the central bank's annual meeting in Rome. In his view, immediate action is needed to reduce record-high business and labor taxes in order to stimulate productivity and employment in a country with unemployment rate at 12.8 percent. Visco also called for measures to "break the negative spiral" in credit availability, the result of a fall in the amount of lending by banks to businesses that led to enduring economic stagnation and recession. The exit from excessive deficit procedure recommended by the European Commission earlier this week should be considered the "first fruit" to grow from the former government's efforts at fiscal consolidation thus "an investment on which to build," he stressed. The termination of the procedure opened in 2009 is expected to free billions of euros though Italian Prime Minister Enrico Letta, who took office last month at the helm of a fragile coalition government, restated on Friday that this amount of money shall not be squandered. On the same day, the government launched a bill gradually abolishing public funding for political parties over a period of three years. Guidelines to the reform include "the definition of strict procedures regarding transparency statutes and budgets of the parties" as well as "implementing tax breaks for people who donate to parties," according to a statement from the government. An escalation of public-funds scandals has hit local governments across the entire political spectrum over the past months, leading many to press the government to adopt the stance.