Italian govt presents mini-budget to rein in deficit
1.6-bn-euro package aims to stop 3% threshold being breached10 October, 10:58
The 1.6-billion-euro package relies on cuts to government ministries (1.1 billion euros) and the sale of State property (500 million euros), while reports it would include a big increase in petrol duties proved unfounded.
Letta's left-right administration last month admitted the deficit was on course to reach 3.1% unless rapid action was taken to fix the budget.
The government had to adjust its deficit forecast, which was initially 2.9% for 2013 but was then revised up to 3%, after rolling back an unpopular property tax called IMU to stop ex-premier Silvio Berlusconi's People of Freedom (PdL) party sinking the executive.
The European Commission warned that Italy faced the risk of a new excessive-deficit procedure being opened just months after one was closed, if Rome did not get the deficit below the 3% limit. The price of not meeting the 3% requirement is stiff - states that are under an excessive deficit procedure and have a debt-GDP ratio of over 60% are obliged to divert public money into trying to reduce that ratio.
In Italy's case, escaping the previous procedure, which was opened in 2009 and closed in May, freed up around eight billion euros in the budget.
photo. Economy Minister Fabrizio Saccomanni