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Local authorities and their role in the reduction of the national public deficit

With the 1998 Financial Law the internal stability agreement was approved pursuant to which local authorities are required to concur on the reaching of goals to reduce the national public debt in line with EU criteria. The Ministry of Treasury, Budget and Economic Planning issued a circular on March 12 1999 with initial indications for local authorities to comply by the requirements introduced with the 1999 Financial Law.

The internal stability agreement will be applicable to local authorities at least until 2001 and the ratio between current expenditures and revenues must be complied with.

The internal stability agreement leaves a certain amount of autonomy to local authorities to determine the means to reach the required goals although they will be required to send to the Ministry of Treasury, Budget and Economic Planning relevant financial information on a monthly, quarterly or annual basis depending on the local authority involved. The Ministry will monitor the results achieved.

A body named Conferenza Stato-Citta autonomie locali (State-Municipalities and local authorities Conference) will be responsible for the verification of possible failures and to determine the relevant additional measures which might be required to reach the contemplated goals. Notwithstanding the intervention of Conferenza Stato-Citta autonomie locali, should Italy be subjected to sanctions for an excessive deficit at EU level, such sanctions will be applied on a pro-rata basis to those local authorities which have not reached the expected results.

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