(Bloomberg) -- Italian Prime Minister Giorgia Meloni dashed European partners’ hopes that she will soon ratify a reform to the euro-area bailout fund.
Rome is the only euro-area capital holding back a minor tweak of the European Stability Mechanism which would, among other things, allow it to act as backstop in case of banking crises. Finance Minister Giancarlo Giorgetti is facing pressure from his counterparts across the region, and parliament is due to start debating the reform at the end of this month.
But Meloni said it’s “stupid” to discuss anything ESM-related now as the entire project needs a fundamental overhaul.
The fund was set up in 2012 after the sovereign debt crisis, and aims to help bail out countries in exchange for reforms. But even minor changes have become politically charged in Italy and successive governments have delayed their approval.
Read More: Italy Will Stop EU Bailout Fund Reform Until Fiscal Rules Review
“It doesn’t make sense to ratify the ESM reform when we don’t even know what the new Stability and Growth Pact will entail,” Meloni said in Manduria, Italy, referring to the EU budget rules which are currently under revision.
The ESM in its current form implies a “stigma” for countries that were to request its funding, she said, effectively “blocking hundreds of billions of euros at a time we discuss day-and-night on how to find additional resources.”
Meloni also criticized the EU Commission’s proposal of new budget rules for the bloc, saying that investment spending should be excluded from deficit calculations. She said she is confident Italy will soon receive its third instalment of EU pandemic aid, which has been delayed as the country falls behind on its investment-and-reform commitment.
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