The Italian government has given a mixed response to the 540-billion-euro (588-billion-U.S. dollar) package agreed to by European financial ministers last Thursday, which aimed at softening the economic blow from the global coronavirus pandemic.
Last Friday, Italian Prime Minister Giuseppe Conte called the plan “insufficient,” saying Italy would “battle to the end” to help secure a plan for what are being called “Eurobonds” — a debt instrument that would be shared by all 19 members of the euro currency zone.
All last week, Conte’s Minister of Finance Roberto Gualtieri had fought for some version of the “Eurobonds” plan. But once the financial package was agreed to, Gualtieri praised it.
“We have put a recovery fund enabling common debt issuance on the table,” Gualtieri said.
Analysts said it was clear that the economic package finally agreed to was a “compromise plan” that gained traction after Germany and the Netherlands opposed any kind of common debt instrument like the “Eurobonds.”
“Gualtieri has been relatively optimistic that the plan finance ministers agreed to is a step in the right direction,” Lorenzo Castellani, a professor specializing in the history of political institutions at Rome’s Luiss University, told Xinhua.
Castellani said the “rigid” stance from Germany and the Netherlands comes from worries they would have to assume more debt, while money raised would be disproportionally used by the countries hardest hit by the pandemic, such as Italy and Spain.
As the head of the third-largest economy in the euro zone, Conte may have been trying to strengthen Italy’s hand in future coronavirus-related economic negotiations, Castellani said.
“This latest economic package won’t be enough on its own,” he said. “Ministers will come back to this topic again.”
According to Lucio Poma, a professor of economics and industrial policy at the University of Ferrara, neither the current economic plan nor the issuance of “Eurobonds” will be enough to completely rescue an Italian economy that was already struggling before the country reported its first case of the coronavirus.
“Italy’s economy has been in need of major structural reforms for many years,” Poma, who is also the director of Industry and Innovation section at the economic studies firm Nomisma, said in an interview.
“This outbreak helped further expose the weaknesses in the economy, but it did not cause those weaknesses,” Poma said. “Other countries will probably emerge from this crisis faster than Italy because they did not have the same weaknesses going into it.”
Estimates vary widely on how big an economic impact the coronavirus outbreak and subsequent economic lockdown will have on the country’s economic growth prospects.
Before the outbreak, most estimates from investment banks, economists, and multilateral institutions predicted the economy would grow around 0.5 percent this year. Now, those estimates are mostly in the range of a negative 6.0 percent to 8.5 percent, before the impacts of the latest economic package were figured in. Enditem