The Ministry of Economy and Finance (MEF) is the most important and influential ministry in the Italian government. Through reforms in the late 1990s and 2001, the MEF absorbed responsibilities from other economic ministries, becoming responsible for treasury, budget, taxation, financial markets, and regional development. During economic crises in 2009 and 2011, the MEF gained veto power over other ministries and prioritized austerity, often undermining their autonomy. Later ministers sought to balance fiscal discipline with growth policies through renewed dialogue between ministries.

1. His Majesty the Ministry
of Economy and Finance:
its sphere of competence
and its pivotal role in
defining key choices of
the Italian Government
July 2013

2. The Ministry of the Economy and Finance (MEF)
It is the most important and influential one within the Italian
Government.
Its structure was laid down in the late Nineties by the “Bassanini”
reform, which came into force in 2001.
The Ministry of Economy and Finance stems from the merging of the
following economic Ministries:
Treasury;
Budget and Economic Planning;
Finance;
State Shareholdings.

3. 2001: merging structures and functions
Since 2001, the MEF is responsible for all the duties falling within the sphere
of competence of the national Government in the following areas:
Treasury/Budget: economic and financial planning, State budget
formation and management, public expenditure coordination and
monitoring, assessment of the budgetary impact of any new legislative
provision, public debt management, management and valorisation of
State-owned assets, regulation and surveillance over the credit system and
financial markets;
State Shareholding: management of State Shareholdings;
Finance: tax regulation drafting, monitoring trends in revenue, tax policy
planning and analysis, management of the relations with, and devolution of
competences in the tax area to regional and local autonomies;
Territorial cohesion and development: coordination and supervision
over economic development and territorial cohesion policies.

4. After 2001: enhanced cross competences
Following the implementation of the “Bassanini” reform the MEF
gradually absorbed many other functions:
Regional healthcare deficits recovery Plans the MEF negotiates
recovery Plans with Regions and monitors the fulfilment of the targets set
by the Plans. If it deems that a Region is incompliant with the Plan,
automatic sanctions apply such as the appointment of an extraordinary
Commissioner and the increase in the regional income tax (IRAP) and the
regional surtax on the personal income tax (IRPEF): this means that
incompliant Regions lose their autonomy in tax policy choices;
Healthcare spending management when the Ministry of Health
was reformed in 2009, the MEF was entrusted with the management
and control of the national Government funding to the National
Healthcare System;
Development Funds management the MEF takes part in the
policy-making process in the area of territorial development and
supervises over the management of relevant financial tools (European
Regional Development Fund, Cohesion Fund, European Social Fund).

5. In 2009 the Italian deficit reached 5.5% of GDP and the EU opened an
infringement procedure for excessive deficit.
In order to ensure the coherence between economic policy choices and
the deficit reduction targets, the MEF gained a
power of veto
with which other Ministries with portfolio had to deal with, and
established itself as the pivotal actor for the most important Government
choices (particularly in the area of public spending).
The bursting of the economic crisis:
MEF rules as austerity guarantor

6. The pivotal role of MEF undermines the balance of powers within the
Council of Ministers, between the then-Ministry of the Economy and
Finance Giulio Tremonti and other Ministries.
Giulio Tremonti addressed the other Ministers:
You all are Ministers
without portfolio
The MEF gained the role of a bottleneck Ministry:
economic and financial policy was negotiated among the MEF
Departments, Tremonti’s Cabinet and the State General Accounting
Department rather than among the Ministers.
Undermined balance of powers
within the Council of Ministers
“ ”

7. November 2011: the Monti Government keeps Tremonti’s team in
charge. Vittorio Grilli, former Director General of the Treasury, became
Vice-Minister, then Minister of the Economy and Finance.
The members of the Minister’s staff (such as the Cabinet, the Legislative
offices and the State General Accounting Department) keep on playing a
key role in any decision-making process.
Any initiative to stimulate growth is only given green-light if it entails the
adoption of zero-cost measures. Hence, the
disagreement
between Grilli and the then-Minister of the Economic Development
Corrado Passera.
.
The Monti Cabinet sticks to austerity

8. Fabrizio Saccomanni, former Director General of the Bank of Italy and
Mario Draghi’s right-hand man, appointed as Minister of the Economy
and Finance, announced his intention to depart from the attitude
displayed by his predecessors, calling for:
a better balance between fiscal discipline and development policies;
renewed dialogue at the EU level for an enhanced focus on growth
and jobs;
a new role for the MEF: no longer a Ministry of vetoes, but open
to dialogue with other Ministries.
Tremonti/Grilli staff entirely replaced.
The Letta Cabinet. The Ministry of the Economy and Finance.
Minister Saccomanni’s staff.
The Letta Cabinet and Saccomanni:
a (possible) trend reversal?
CLICK
HERE