960428

Dini says mini-budget up to next Italy government

MILAN: Outgoing Prime Minister Lamberto Dini said it would be up to the next government, probably headed by centre-left leader Romano Prodi, to take any necessary deficit-cutting measures to keep this year's PSBR on target.

Dini, a former central banker and now an elected centre-left ally, has said this year's deficit will overshoot its 109.4 trillion lire ceiling by 9.6 trillion lire.

"I have the impression that the so-called mini-budget should be up to the next government, unless parliament decides otherwise. If so, then my government will not shirk its responsibilities," he said in a television interview to be broadcast on Monday.

But Dini said that his caretaker government was near its term and in any case was just looking after routine administration until a new government took over.

Walter Veltroni, the centre-left Olive Tree coalition's number two, had wanted Dini to pass the measures which could otherwise force Prodi to take unpopular action as soon as he entered office.

Dini noted that a safeguard cause in the 1996 budget law, passed by parliament last December, stipulated that if the PSBR overshot its target and corrective measures were necessary, these could only be made by selective spending cuts and not by increasing fiscal pressure.

Italian trade union confederations said in a statement this weekend that they would not tolerate any social welfare cuts. "There is no room for further savings in this sector," their statement said.

Dini said he was hopeful of a near-term interest rate cut, but the decision would have to be made by the Bank of Italy.

"Inflation is falling and I think we will have a reduction in rates soon," he said. Asked if this could happen in summer, Dini replied, "more or less."-Reuter