Italy PM wants to transform ‘obsolete’ eurozone rescue fund

ROME: Italian Prime Minister Giorgia Meloni on Thursday called the eurozone’s bailout fund “obsolete”, saying Italy’s failure to ratify a reform of the system was an opportunity to make it “more efficient”.

MPs in the lower house of parliament last month rejected a motion to ratify the 2021 reform of the European Stability Mechanism (ESM), which strengthened the fund’s financial firepower and increased its authority to supervise countries in difficulty.

Italy thus remains the only European Union country not to ratify the treaty, which cannot be implemented without approval by all national parliaments.

Asked at a press conference how her hard-right government would respond, Meloni said there had never been a majority in the Italian parliament for ratification, and the ESM was an “obsolete” tool.

“Perhaps Italy’s failure to ratify the treaty could become an opportunity to turn it into something more effective than it is today,“ she told reporters.

“In my opinion, this is the direction in which the government should work.”

Meloni’s government was split on the December 21 ratification motion put forward by the centre-left opposition.

Her post-Fascist Brothers of Italy party voted against it, as did the far-right League of her deputy premier, Matteo Salvini.

But the third party in their governing coalition, the right-wing Forza Italia of the late Silvio Berlusconi, abstained.

Created in 2012 in the heat of the eurozone debt crisis, the ESM borrows on the financial markets to provide loans at below-market rates to eurozone states in difficulty, who must in return implement reforms to their public finances.

Spain, Portugal, Greece, Ireland and Cyprus have all used it but Italy remains deeply suspicious, with many considering it a tool for Northern European countries to impose austerity on the south.

There are also fears in Italy that if it used the ESM, it would be forced to restructure its enormous debt.

In December 2022, Meloni said she would “sign in blood” that Italy would not join the ESM. -AFP