Ministry of Economy and Finance MEF: BORROWING REQUIREMENT, CLOSING OF PUBLIC ACCOUNTS IN LINE WITH EUROPEAN COMMITMENTS

The surplus of the state sector referring to December 2008 currently stands at 2,900 million euro.

Briefly, on the basis of data available to date, the closing of public accounts appears to be in line with the commitments undertaken by the Republic of Italy.

These commitments will be made official in the update to the stability and growth programme set to be submitted to the European Union in the next few days.

The yearly budget deficit of the public sector for 2008 stands at about 52.9 million euro.

Given the combination of the unfavourable economic cycle with anti-cyclical policies aimed at leaving and/or introducing liquidity in the system, the 2008 figure was impacted by the following factors.

The law on decreasing the percentage of the second advance of IRES (corporate tax) and IRAP (regional tax on productive activities) has shown its effects on revenue; on top of this, there is a lower tax wedge and the exemption from local property tax on the main home.

Furthermore, the month's lower balance is the result of no longer having the special payment by the Fintecna S.p.A.

In terms of expenditure, the figure was impacted by the following factors:

­higher tax refunds in implementation of the provision of decree law no. 185/2008 under which those relating to tax credits of over ten years have been accelerated;

­advances to regions to pay off the healthcare debt backlog, under the 2008 finance bill;

­ greater amounts withdrawn from the state treasury by local authorities;

­ renewal of civil servants' contract;

­ disbursement to the Cassa Depositi e Prestiti S.p.A.

­ higher interest on public debt;

The earlier estimate of the overall 2008 budget deficit, published in the Forecast and Planning Report for 2009, had forecast a borrowing requirement of 45.2 billion euro.

At any rate, the aforementioned disparity, generated by the negative economic cycle combined with the parallel liquidity policies, has produced a rather marginal impact on the borrowing relevant in terms of the calculation of European parameters.

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, January 2, 2009