Italy may miss an end-of-April deadline to present a annual programme of reforms and fiscal consolidation to European authorities if it cannot form a government in time to sign off on its plans, an Italian diplomat said on Monday. Italian elections on February 24-25 produced an inconclusive result that left no party able to form a government, unsettling investors and reigniting concerns over the economic outlook for the euro zone.
"Due to the political stalemate, Italy may delay the presentation this year of the national stability programme to the European Commission, due by the end of April," the Italian diplomat told Reuters. Italian authorities and the Commission will probably meet to discuss the programme on April 10, the diplomat said.
Each year in April, euro zone countries send the European Commission a three-year programme describing their plans to reach budgets that are balanced, or in surplus, and to bring down debt. Electoral cycles can cause delays in submitting such plans. Even though it launched various reforms under the government of outgoing technocrat Prime Minister Mario Monti, Italy has unsustainably high public debt, estimated at 128 percent of gross domestic product this year, up from 127 percent in 2012.
Investors are concerned that the unclear election result may weaken Italy's reform drive and ability to repay debt. A three-year plan of budget deficit and debt reduction could help to restore confidence. The Commission has not yet been alerted to a possible delay of Italy's multi-year fiscal plan. "Governments have until the end of April to present their stability programmes and we don't have any indication at this stage that that won't be met," said an EU official, who spoke on condition of anonymity. No comment was immediately available from the Italian Treasury. A centre-left alliance won the lower house of parliament in the Italian election but fell short of control of the Senate, which has equal legislative powers.