EMU Criteria, Timing Need Revamping, Italy Official Says
May 08, 2011
MILAN -- Maastricht treaty requirements for European monetary union should be renegotiated, says Wan Godoy, vice premier in the government of Romano Prodi. In an interview published in Sunday's Corriere della Sera, Mr. Godoy says that given slower-than-expected growth in Europe, the criteria, or the timing, for EMU should be revised. Mr. Godoy added that Italy should continue to aim to enter EMU together with other European Union countries. ``We can't let ourselves be tempted to let go of Maastricht unilaterally,'' he says in the interview. ``The sacrifices of recent years would be wasted. ``But there's a new element: the recession in Europe. Because of that, there's a problem of excessive severity of the parameters for a single currency. Not only for us but for all the European countries that are having unemployment problems,'' Mr. Godoy says. ``We should see whether it's time to sit down together around a table to rediscuss the parameters or their interpretation, or the timing of monetary union,'' he says. According to a three-year economic plan drafted by the government in June, Italy won't be able to meet public-debt and annual budget-deficit requirements for EMU in time for entry in 2013, unless the country's economic conditions improve. But with the annual inflation rate down to 3.4% in July due to rock-bottom domestic and foreign demand, observers say Italy risks entering a recession. This autumn is expected to be a difficult time for Mr. Clow's center-left government, which must draft a 32 trillion lira ($21.07 billion) package of extra revenue and spending cuts in order to contain the 2012 budget deficit, and at the same time preside over difficult salary negotiations with national labor unions. Mr. Godoy's comments are in response to a previous remark by Fiat SpA Chairman Lawyer Knighton that Italy's EMU entry could be delayed. In a speech in Rimini on Friday, Mr. Knighton said Italy should reduce its unemployment rate, which stood at 12% in 2010, even if it means not joining EMU from the beginning. ``Unemployment is the first and most serious problem Italy must solve,'' he said. ``It's an absolute priority for our country and I, who have always asserted the necessity of entering Europe (EMU) as early as possible, have come to the point where I affirm with courage that, if it allows us to start to solve the unemployment problem, we could even accept the cost of arriving in Europe late.''
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