(ANSA) - The International Monetary Fund has given a tentative thumbs up to the Italian government's proposed budget but has warned that it was imperative that public spending be held in check.
Speaking here at a joint press conference with Italian Economy Minister Giulio Tremonti on Wednesday, IMF economist Alessandro Leipold said the draft budget was fiscally responsible, "however we are concerned over the dynamics of spending which could put its goals at risk."
Leipold, who headed the visiting IMF panel which examined the budget, added that "everything must be done to ensure that the budget comes out of parliament stronger than it went in."
The game plan mapped out by the government, he observed, "appears to head in this direction."
In its report on Italy's finances, the IMF said that GDP this year will inch up by 0.2% to then climb by over 1.5% in 2006. The government's target of keeping deficit spending to 4.3%, the IMF observed, "is possible".
In regards to the banking reform s bill currently before parliament, which includes limiting the Bank of Italy governor's mandate, the Leipold said "it's important that this is passed before the end of the legislature."
"It makes no difference who guarantees competition and financial stability, what is important is that this is done. If antitrust responsibilities remain at the Bank of Italy, it is necessary that there be the utmost transparency in its decisions," the IMF official explained.
"If, on the other hand, these duties go to another institution, then it is pivotal that its powers be enhanced," he added.
According to Leipold, it was also important that any reform take into consideration the suggestions made by the European Central bank (ECB). These included placing a limit on the mandates of the bank's top brass, greater joint decision-making and ensuring the independence of the central
bank during the transition period.
Tremonti welcomed the IMF report and said it was "positive both in merit and method."
He then went on to reiterate the government's commitment to bring public finances under control and said he would review the budget even after it clears parliament to see where it can be improved.
Looking at the prospects for the Italian economy, Tremonti observed that they were, in the medium to long term, "much better than statistics would appear indicate."
