Window dressing for EMU nothing sold-nothing bought!
Italy says gold transaction all above board
11:23 a.m. Dec 11, 1997 Eastern
ROME, Dec 11 (Reuters) - A tax gain on the sale of gold from the Italian
Foreign Exchange Office (UIC) to the Bank of Italy (BOI) can be used to
cut Italy's 1997 deficit and is not window-dressing, a senior UIC source
said on Thursday.
The source told Reuters that the UIC had sold its entire gold holding --
540 tonnes -- to the Bank of Italy in July.
The Bank netted a capital gain of around seven trillion lire ($4
billion) on the transaction, on which it paid a tax to the Treasury of
some 3.5 trillion lire.
That gain to the Treasury translates into a cut of roughly 0.175 percent
in Italy's deficit-to-GDP ratio.
European states wishing to qualify for economic and monetary union have
to cut their deficits to three percent of GDP in 1997 and Italy, once
considered a rank outsider, has now said it will definitely hit the
target this year.
The European Union's statistics agency Eurostat, which sets and monitors
accounting criteria, said earlier that it was studying the internal gold
transaction and was seeking more details from the government, but the
senior UIC source said the operation was completely above board.
''There is no need for approval,'' he said. ''It's not window-dressing.
There is no need for formalisation or authorisation. It is a transaction
like any other.''
He said that since the 3.5 trillion lire was a tax, it went into
Treasury coffers just like any other taxes and therefore could
automatically be used to cut the deficit.
Eurostat officials were due to meet Italian officials at Istat, the
state statistics body, on Friday and the gold issue would be top of the
agenda, Istat said.
But the UIC source stressed it was a routine meeting, one of more than
50 that have already taken place with Eurostat this year. He said he
could not understand the fuss over the gold transaction, describing it
an operation carried out in accordance with legislation.
The 540 tonnes of gold sold by the UIC, a division of the Bank of Italy,
had been handed to the office by the central bank in 1976 to secure a
German loan.
Although the loan was repaid in 1978, the gold remained in the UIC,
appreciating in value to seven trillion lire more than its 1976 value.
The source said the UIC now held no gold.
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