Italy's 2015 budget was set to
receive European Commission approval Tuesday after deeper cuts
were made to meet the EC's requirements.
The news came from EC sources shortly before the revised
budget and the government's three-year fiscal blueprint were to
be outlined for Premier Matteo Renzi's cabinet.
Later, those documents, including 4.5 billion euros in
changes to ensure a deeper reduction to Italy's structural
deficit, were to be presented to parliamentarians.
The changes had been outlined in a letter sent Monday by
Economy Minister Pier Carlo Padoan to Jyrki Katainen, European
Union's commissioner for economic affairs.
In the letter, Padoan pledged a reduction of 0.3% in the
ratio of deficit-to-gross domestic product (GDP) in 2015, larger
than the 0.1% cut originally planned in Renzi's 36-billion-euro
budget.
The move was designed to win EU approval for the Italian
budget that includes 18 billion euros in tax cuts and 15 billion
euros in spending reductions.
Padoan was expected to appear before the finance committees
of the House and Senate later to outline the changes while other
parliamentarians will get a chance to review the amended
document later in the week.
According to Loredana de Petris, a Senator with the Left
Ecology Freedom (SEL) party, the Senate will see the document on
Thursday.
Meanwhile, a spokesman for Katainen said Padoaon's letter -
and a similar message from France - were considered to be
"constructive contributions" to its analysis of European
budgets.
France was also reportedly poised to see its budget
approved after it pledged to cut its deficit by 3.6 billion
euros, according to media reports.
Renzi's government had initially planned to reduce the
structural deficit of the eurozone's third-largest economy by
just 0.1% next year in a budget aimed at bolstering
recession-battered GDP.
But a letter Katainen sent to Rome last week said the
original budget plan would lead to a "deviation" from Italy's
medium-term adjustment targets, and was therefore in breach of
the EU Stability and Growth Pact.
Renzi reached an agreement to deepen the deficit reduction
at last week's European Union summit in Brussels - a compromise
solution with the EC, which reportedly wanted a cut of around
0.5%.
Padoan said the measures to reduce the structural deficit
by 0.3% of GDP in 2015 will cost 4.5 billion euros.
Of those, 3.3 billion euros would be taken from funding
previously allocated for tax cuts, 0.5 billion would come from
EU co-financing funds, while 0.73 billion would come from an
extension of the reverse charge VAT on imported goods and
services.
He also warned that Italy must be avoid enduring another
year of recession.
"Italy's GDP has fallen over 9% on its 2008 level," read
the letter by Padoan.
"The economy is in its third year of recession and there is
a serious risk of stagnation and deflation. A fourth year of
recession must be avoided at all costs".
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