Roundup: Italy's cabinet approves decree to avoid Rome default
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E-mail Xinhua, March 1, 2014
Italian cabinet approved a decree to help the capital city of Rome to avoid looming risks of bankruptcy on Friday.
The so-called "Save Rome" decree allowed an amount of 570 million euros (787 million U.S. dollars) transfer to the capital city municipality, in order to reduce a massive gap in its finances.
The funds, a small portion of which was already anticipated last year, would be destined to 2013 and 2014 budget, the cabinet said.
"These funds were supposed to be transferred to the city year by year. Now the municipality of Rome will received them all together, in order to consolidate its public finances," cabinet under secretary Graziano Delrio explained in a press conference after the meeting.
The government's intervention, however, came under stricter conditions. The city was required to work out an "urgent and necessary" recovery plan and submit it to both Economy and Interior Ministries and to the Parliament, the cabinet specified in a statement.
In its plan, Rome municipality will have to define how it will put its debt under control and also to justify its purchases and levels of staff. The decree finally asked the municipality to better supervise its subsidiaries and consider divesting some real estate assets.
The decree will be immediately effective, but will need Parliament's approval within 60 days to be confirmed. It will help Rome fill a budget hole of 816 million euros, partly due to recent cuts in transfers from the Italian central government to local authorities.
It would also help the city in dealing with extra costs related to its role as capital, a major destination for tourism in Italy and as the seat of the Vatican.
Rome's Mayor Ignazio Marino said the recovery plan would not be a worry. "We do not intend to spend any money that does not belong to the city," he said, agreeing on the need of putting Rome's finances gradually in order.
The decree, aimed to dispel the risk of default, had actually sparked tension before its approval between Marino and new Prime Minister Matteo Renzi, giving to the latter a first big 'political' headache only few days after being appointed.
A similar "Save Rome" decree was indeed approved by the previous government led by PM Enrico Letta, and entailed a bailout of about 850 million euros. It would have required parliamentary approval before end of February, but Renzi's cabinet withdrew it on Wednesday, since it was likely to gather limited support in Parliament.
Marino threatened to resign if the cabinet would fail to approve a new decree, since he had no intention of presiding over a possible default of the city.
Most analysts agreed that Marino, a transplant surgeon who won municipal election last year, inherited a very delicate financial situation from the previous administrations.
According to local media, the city's debts amount to 12-14 billion euros, and the great majority of its 26 municipal companies generate losses more than profit. Even the 44 council-run pharmacies work at a loss with a 10 million euros hole, according to city council sources.
Also on Friday, in separate provisions, the cabinet named 35 under-secretaries and 9 deputy ministers to complete the government's staff, and approved a measure that allows municipalities to increase a new local service tax to compensate foregone profits of a recently cancelled housing tax. Endi
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