BRUSSELS, July 8 (Xinhua) -- Italian Financial Minister Pier Carlo Padoan said Tuesday that the European Union (EU) and Italy must focus on making structural reforms to boost growth.
Italy will try to help all EU member states to find incentives to reform, according to Padoan who chaired the first finance ministers' meeting under the Italian presidency on Tuesday.
The meeting is considered a key forum for any change in the direction of the EU's economic policy.
Padoan said structural reforms must be made in the EU to encourage growth and investment, although he did not specify what reforms his country intended to push for.
"The strategy that the Italian Presidency suggests to addressing growth and jobs rest on 3 pillars: First of all we need better market integration and this is consistent with the Europe 2020 strategy that is to be reviewed by the end of this year. Second, structural reforms as a major powerful driver of growth in all countries, and third, finance instruments to support and boost investment both public and private," said Padoan.
The comments comes amid weeks of discussions that Italy urged greater flexibility in meeting EU's budget deficits limits in order to allow for more spending to help reduce unemployment, while Germany, the Netherlands and other stronger economies argue the government debt rules must remain unchanged.
According to EU rules, each member state's government budget deficit should not exceed 3 percent of its annual gross domestic product (GDP), and overall government debt should be kept under 60 percent of GDP.
Italy, as the third largest economy in the eurozone, is struggling with high unemployment rate which is up to 12.6 percent, and its accumulated public debt is projected to reach 135 percent of GDP at the end of the year.
While stressing structural reforms to boost growth instead of easing the rules limiting government debt, Padoan appeared to backtrack from Italy's position to some extent.
Italian Prime Minister Matteo Renzi said Tuesday in Venice that investment in digital infrastructure should be excluded in the calculation of public fiscal deficit.
Speaking at the press conference after Tuesday meetings of EU finance ministers in Brussels, Siim Kallas, Vice President of the European Commission, said that Renzi's idea won't work, reforms must go hand in hand with fiscal consolidation and there is no contradiction between the two.
"Expenditures cannot be excluded from the budget deficit calculations, this is something fundamental," said Kallas. "There cannot be bad and good expenditures. Expenditures are expenditures, debt is debt."
Around two weeks ago, International Monetary Fund head Christine Lagarde urged the EU to simplify its "excessively complicated" budget rules, saying they are rarely met by struggling economies and discourage investment.
Lagarde said these limits were set during a period of high growth "that has nothing to do with today."