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'Balanced budget linchpin of govt policy' says Monti

'Light of recovery' but GDP down 0.2% next year

20 September, 19:16
'Balanced budget linchpin of govt policy' says Monti (ANSA) - Rome, September 30 - Balancing the budget in 2013 remains the linchpin of the Italian government's programme to bring public finances under control, Premier Mario Monti said Thursday as the government lowered its two-year growth forecasts.

"The linchpin of our policy of fixing the public accounts remains unchanged: namely, it remains the objective of a structurally balanced budget in 2013," the PM said.

A structurally balanced budget - within 0.5% of GDP - was the fiscal policy's "anchor", he said.

Monti confirmed the goal of a balanced budget in 2013 despite a worse-than-expected recession and the impact of unforeseen natural disasters like the devastating earthquakes that hit Emilia Romagna.

In the new forecasts, the economy will contract by 2.4% this year and 0.2% in 2013.

Despite this, Monti said the economy would in fact pick up.

"The light of the recovery can be seen. Next year will be a year of recovery," he said.

The markets would punish Italy and it would be harder to push Europe for growth policies if Rome did not continue on its current policy track, he said. Monti said government policy would be geared towards cutting spending rather than raising taxes.

The national debt will be 123.3% of GDP in 2012 and fall to 122.3% in 2013, according to the latest forecasts.

The government confirmed a goal of selling off State assets worth some 1% of GDP per year to bring the debt down.

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