Renzi to visit Merkel in Berlin, Italy 'not a dunce'

Premier reportedly seeking green light for budget leeway

(ANSA) - Rome, March 17 - Premier Matteo Renzi flies to Berlin Monday for a bilateral summit with Chancellor Angela Merkel as part of efforts to reassure European partners Italy is not going off the rails with budget discipline while at the same time winning the green light for some fiscal leeway.

The premier, the leader of the centre-left Democratic Party (PD), has made several calls for Europe to focus more on growth and employment and less on German-mandated austerity that was the European Union's main response to the eurozone debt crisis.

Renzi, who became Italy's youngest premier at 39 after unseating his PD colleague Enrico Letta last month, also met French President François Hollande in Paris on Saturday ahead of a summit of European Union leaders later this week. Renzi announced an array of measures on Wednesday to revive the economy, which remains weak after emerging from its longest postwar recession last year, with unemployment at record levels of close to 13%.

He presented plans to cut income taxes by 10 billion euros, invest 1.74 billion euros in social housing programs, spend 3.5 billion euros on schools and repay 68 billion euros in outstanding bills, among other things.

He said that he had found ways to finance the measures without raising other taxes and promised Italy will not breach the 3% deficit-to-GDP ratio threshold that the EU allows.

But Renzi, who will lead a delegation of six ministers Monday, reportedly wants Italy to be allowed to post a deficit higher than the 2.6% of GDP that it had been forecast for this year.

A German government spokesman called Renzi's economic-reform agenda "ambitious" on Friday. In an interview broadcast Sunday, Renzi said that Italy had made big strides forward in putting its public finances in order in recent years and "is not a dunce who should be made to stand behind the blackboard". The European Commission recently said the 2014 budget passed by Renzi's predecessor Letta did not do enough to bring down Italy's massive public debt of over two trillion euros, around 133% of GDP.

As a result it put Italy under "specific monitoring" over its "excessive macroeconomic imbalances", which include high debt and poor competitiveness, as part of an in-depth review.

In its monthly bulletin, the European Central Bank complained Thursday that Italy has not made "tangible progress" on hitting budget and debt targets set by the Commission.