ROME (AP) — Italy’s deputy premier on Saturday brushed off a ratings downgrade and vowed to forge ahead with the government’s rule-busting budget as Italy prepared to respond to European Union concerns about its high deficit targets.
International credit rating agency Moody’s late Friday downgraded Italy’s ratings to Baa3, with a stable outlook, citing the “material weakening in Italy’s fiscal strength” stemming from the revised budget deficits.
The European Commission has already warned Italy that its higher-than-expected targets represent an unprecedented deviation from EU budget rules. The government has until midday Monday to respond to the EU concerns.
On Saturday, Deputy Premier Matteo Salvini said he wasn’t worried and that the government was merely doing what was best for Italians.
“The government will go ahead despite ratings agencies, European commissioners and some internal misunderstanding.” He said ratings agencies had been wrong before about Italy “and they’ll fail again this time. It’s a good budget and we’ll see it through to the end.”
The populist government, made up of the 5-Star Movement and Salvini’s League, planned an emergency Cabinet meeting later Saturday to discuss the budget and claims by the 5-Star leader that unauthorized changes were made to the draft budget.
Luigi Di Maio told a late-night talk show that the draft presented to the Italian president contained a proposal to extend a tax amnesty on money held abroad and brought back to Italy. The 5-Star Movement opposes such a move.
Salvini has said Di Maio’s accusation was “surreal,” but the dispute suggested a rift in the 4-month-old coalition government.
Italy insists that the increased spending in its plan is necessary to boost growth, which will bring down debt, and that the higher deficit will in turn come down.
But Italy is one of the 19 European nations that use the joint euro currency, and its eurozone partners have demanded that it give up plans that will push its deficit up to 2.4 percent of gross domestic product — three times higher than promised by Italy’s previous europhile government.