Italy to cut hefty bureaucracy to balance budget

MILAN — Italy’s finance minister on Wednesday called cuts to the country’s notoriously hefty bureaucracy the most “revolutionary” element of the (euro) 48 billion ($68.7 billion) three-year austerity budget.

Among the measures are plans to reduce the number of official government cars from tens of thousands to 1,600. Compensation for lawmakers also must fall in line with the European average, and each year figures tallied by government and European statistical experts will be officially published, under the new plan.

“I believe the most radical and revolutionary changes are those regarding the costs of the political and administrative apparatus,” Finance Minister Giulio Tremonti told a news conference after the plan was signed by Italy’s president.

It still needs parliamentary approval, and Tremonti did not rule out changes by lawmakers.

The government approved the measures last week in a bid to convince markets and the European Union that it can reduce its deficit. While Italy has seen its borrowing costs rise, it so far has escaped contagion that has forced bail outs of other so-called periphery nations, like Portugal and Greece.

However, the Standard & Poor’s and Moody’s ratings agencies have put Italy on warning that it must clean up its finances or face possible downgrades that would make it even more expensive for it to borrow money. Both will be watching not only the announcements of budget cuts, but also their implementation.

Italy aims to balance the budget by 2014, from a deficit of 3.9 percent of GDP this year.

“We are totally convinced that this plan will put us linearly and structurally on the path to a balanced budget. And once the budget is balanced, debt will automatically decline,” Tremonti said.

Italy’s debt, at around 120 percent of GDP, is one of the highest in Europe.

Premier Silvio Berlusconi on Tuesday hastily withdrew a measure that would have allowed his family investment company to delay paying a hefty fine, following public outcry. Tremonti declined to comment on the controversy.

The measure would have forced judges to delay payment of especially high fines until all appeals have been exhausted. Berlusconi’s family Fininvest investment company has been ordered to pay (euro) 750 million ($1.1 billion) to a rival for alleged corruption in the takeover of the Mondadori publishing house in the 1990s. A verdict in the appeal of the two-year-old decision is expected this week.

The austerity plan also includes cuts to Italy’s local governments — raising protests from the entities.

“Cuts of (euro) 9 billion or (euro) 10 billion to city administrations and regional governments is worse than a tax on bread,” said Paolo Cento, an opposition politician involved overseeing local government policies.