"Giuliano Amato: The deficit is at a record 1,5% of GDP"

by Dino Pesole
December 29, 2000

In his annual end-of-year press conference the Prime Minister, Giuliano Amato, has painted a rosy picture of the Italian economy. With economic growth in 2000 "approaching 2.8%", inflation at 2.6% (but at 1.6 to 1.7% if you exclude the effect of increased oil prices); a deficit estimated at 1.5% of GDP, in line with the target set by the E.U. Amato said yesterday that, "We can be satisfied and proud of Italy. We are no longer the black sheep of Europe". Furthermore, 1.253 million jobs have been created since 1996 and the rate of unemployment is also set to fall further in 2001. But more important is the fact that "the rate of growth of new jobs in the South is generally improving". Investments made by companies have gone up by 6.85%, industrial output by 4%. Amato is in favour of the proposal to pay out a "social dividend" made by the Finance minister, Vincenzo Visco, to the extent that it will become part of the Ulivo party's electoral programme.

The rosy picture painted by the Prime Minister encompasses more than the economy. It also emphasizes the progress made in the fight against crime and illegal immigrants. On the political front, Amato has no regrets about the choice of Franceso Rutelli as candidate for the prime ministerial role. Instead he has argued with Silvio Berlusconi and his centre-right coalition, the Polo, for not having given credit to the marked progress made by Italy in the past five years. Amato is also said to be against having early elections: saying that in the next two months important measures could be approved, such as those concerning fair trials, federalism, and reforming company law.

Economic growth "at nearly 2.8%"; inflation close to 2.6% with the consumer price index at between 1.6% and 1.7% excluding the effect of increased oil prices; a deficit of 1.5% of GDP in 2000, higher than the 1.3% forecast by the government but in line with the target set by the E.U, thanks to a surplus in December worth 25 billion lire. As for the rate of employment, "we have gone up from 52.5% nationally to 53.5% in 2000", and since 1996, 1,253,000 more jobs have been created, whilst the forecast for the rate of unemployment is set st 10%". Consumer spending has risen by 2%, still below the rate of growth, but set to rise further as a result of the Budget for 2001.

Giuliano Amato revealed data and figures yesterday, during his usual end-of-year press conference, to shed light on the "progress made and results achieved to date" on the economic front, with company investments increasing by 6.85% and industrial output by 4%. "Italy is a country we can be proud of. We are no longer the black sheep of Europe".

Firstly, the economic growth. Amato said that, "It is likely that the annual average will be the same as in the first three months of the year, even though there was a slowing down in the last part of 2000, due to the reduction in ouput in the areas affected by floods. But above all, for Amato the most significant factor is the increase in employment in the South, registered at 1.7% in the last quarter, against 1.1% in the North and 0.6% in Central Italy. The conclusion is that development efforts "tend to generate a higher rate of growth in the South". Whilst it is true that a large part of this new employment is due to unconventional jobs, it is also true that at this point it becomes feasible to reduce unemployment in the South to below 20% in 2001. This remark is targetted at the Polo in connection with the "quality" of the new employment: "There is nothing wrong with the centre-right coalition doing its job. But after years of maintaining that it was necessary to provide greater flexibility in the labour market, how can they now say that these jobs are precarious and insecure?"

Amato supports the proposal of a "social dividend" put forward by the Finance Minister, Vincenzo Visco, and he believes that it could be officially included in the Ulivo's electoral programme. With reference to the Budget recently approved by Parliament, the Prime Minister considers it "good, with contents essentially unchanged by Parliament", even though there was some "window dressing", that he didn't support. In any event, Amato flatly denies any criticism in connection with setting aside the greater part of the fiscal bonus for families. These critics are "hardliners who are convinced of the effectiveness of Soviet centralised planning in the Thirties". On the contrary, channelling additional resources to families "is strongly conducive to growth, as well as addressing principles of equity".

In any event, it is wrong to maintain that resources assigned to families are to the detriment of company growth and competitiveness. The latter, on the other hand, "have benefitted from significant assistance and tax incentives, so much so that an Italian company investing today has a better fiscal treatment than one in Germany".

As usual, the barrage of questions by journalists covered wide-ranging issues. On health care vouchers, Amato curtly pointed out that the decision to eliminate those on pharmaceuticals with effect from 2001 was taken by the Health minister Veronesi, not by Fausto Bertinotti. With reference to Enel, it is necessary to separate ownership from the distribution network, whilst on privatisations it is important that Parliament approve the decree on local public services as soon as possible, "they are an extremely useful source of market creation".

With regard to the Umts auction which raised 27,000 billion lire, much less than expected, Amato said, "As far as I am concerned, I never mentioned amounts higher than 25,000 billion lire". Just a comment on pensions, "I am evaluating the feasibility of examining the problems in connection with the pension accounts". A problem that, in any event, "will have to be dealt with in 2001". Finally, the tax situation: "The Finance minister is signing the decrees and with effect from 1st January the Agencies will be operational".