European Union member state governments should keep their debt in check amid concern over the budget plans in Italy, according to European Central Bank chief Mario Draghi.
Draghi, an Italian and the former governor of the nation’s central bank, was also critical of politicians in the ruling coalition. He said they have hurt the economy with wild promises and conflicting messages about election pledges and taking steps to keep the deficit in check.
“Words in the last few months have changed many times,” he said. “Unfortunately, we’ve seen that words have created some damage and interest rates have gone up for households and gone up for firms.”
As reported by Bloomberg, the remarks are effectively an attack on Italy’s deputy prime ministers, Luigi Di Maio of the anti-establishment Five Star Movement, and Matteo Salvini of the far-right League. Their comments over the summer have unsettled investors, sowed doubt that the government will keep debt in check and sent bond yields higher.
Speaking in Frankfurt after the ECB’s regular policy meeting, Draghi said that once Italy’s budget law is drafted and debated in the parliament in Rome, “then savers, capital markets and investors will formulate their view.”
Italy’s debt-to-GDP ratio is above 130%. The government is slated to release the economic framework for the budget by the end of the month and submit its full plan to the EU by mid-October.
“In the last few months words have changed many times and what we are now waiting for are facts, mainly the budget law and the subsequent parliamentary discussion,” Draghi was quoted as saying the Italian news agency ANSA. “The Italian premier, the economy minister and the foreign minister have said Italy will respect the rules.”