5/31, 12:24 PM (Source: TeleTrader)
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ECB's Visco: Italy must fuel growth, not subsidize

The government in Rome should focus on expenditures amid possible punitive measures by the European Union over fiscal imbalances, Governor of the Bank of Italy Ignazio Visco told CNBC on Friday. Asked about the initiative for a flat tax, he said the country needs "comprehensive tax reform" since the last one was conducted in the early 1970s and that the endeavor would be possible in cooperation with the European Commission. The policymaker called on the cabinet of Prime Minister Giuseppe Conte to direct investment into future growth instead of subsidies.

The central bank today suggested the state should come up with a strategy to reduce the ratio of public debt and gross domestic product and impose careful budgetary control.

Visco said the balance can be improved with measures against tax evasion, which he added was quite strong, with the help of new technologies. The fiscal overhaul should be centered on the labor market and improve the business climate, he underscored and warned overall uncertainty is visible in postponed investments. Italy's point of strength is low private sector debt relative to other developed countries, according to the member of the European Central Bank's Governing Council.

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