Italy’s PM Matteo Renzi says August quake caused at least 4 billion euros of damage

Brussels says it has granted Italy "unprecedented" budget flexibility in recent years and is concerned about Rome's inability to bring down its public debt, the highest in the euro zone after Greece's as a percentage of GDP.

By: Reuters | Rome | Updated: September 23, 2016 4:30 pm
Matteo Renzi, Italy quake, Italy earthquake, Italy, earthquake, Italy earthquake damage, Italy quake death toll, news, latest news, world news, Italy news, International news Italian Prime Minister Matteo Renzi said all money spent on making Italy’s schools earthquake proof would be excluded from EU’s Stability Pact which sets deficit ceilings for the bloc’s members. (source: AP)

An earthquake that killed 297 people in central Italy last month caused damage worth at least 4 billion euros ($4.5 billion), Prime Minister Matteo Renzi said on Friday. Renzi, who is looking for as much fiscal leeway as possible from the European Commission as he prepares his 2017 budget, has said he expects earthquake-related costs to be excluded from the EU’s budget deficit limits. However, he has remained vague on whether those costs should include only the immediate aid and reconstruction effort for the towns affected, or also costs related to a broader project to make Italy’s buildings more earthquake-resistant.

“We are looking at a minimum of 4 billion euros ($4.48 billion),” Renzi told reporters on Friday in his first estimate of the extent of the damage in the mountain towns hit by the Aug. 24 quake.

He said all money spent on making Italy’s schools earthquake proof would be excluded from EU’s Stability Pact which sets deficit ceilings for the bloc’s members. It remains to be seen whether the EU Commission will agree with this approach. The government, which will publish new economic forecasts next week, is expected to sharply raise its target for the 2017 budget deficit from the current goal of 1.8 percent of gross domestic product.

Brussels says it has granted Italy “unprecedented” budget flexibility in recent years and is concerned about Rome’s inability to bring down its public debt, the highest in the euro zone after Greece’s as a percentage of GDP.

Renzi has insisted that the EU’S fiscal rules should be relaxed, and has attacked his fellow leaders for failing to acknowledge that austerity policies have been counter productive. European Commission President Jean-Claude Juncker said on Thursday Rome had already been given 19 billion euros of “flexibility” in its 2016 budget, in comments widely interpreted in Italy as a signal he may be reluctant to grant much more leeway for next year.