The Italian government approved emergency measures on Wednesday aimed at keeping this year's budget deficit inside the EU's ceiling of 3 per cent of national output.
Economy Minister Fabrizio Saccomanni told reporters the measures, worth €1.6 billion, would correct a deficit that was heading for a marginal overshoot to 3.1 per cent. The cabinet decree is immediately effective but must be passed by parliament within 60 days or the measures will expire. The package comprises a €1.1 billion cut in spending by government ministries and local authorities and €500 million of extra revenues from the sale of public buildings.
Enrico Letta's government is targeting the fiscal gap to fall to 2.9 per cent from 3.0 per cent in 2012 to allow Italy to stay off the EU's blacklist which imposes tougher corrective action on countries with excessive deficits. Italy's public finances remain delicately balanced. Some analysts believe the deficit is heading for a larger overshoot, but the government has already passed legislation allowing for a last-minute increase in end-year payments of company tax if this proves to be the case.
Meanwhile Italy's massive public debt, the second largest in the eurozone, is heading for a new record high of 133 per cent of output gross domestic product this year. Letta, who last week beat off an attempt by centre-right leader Silvio Berlusconi to bring down his left-right coalition government, must now turn to the more challenging task of presenting a credible 2014 budget by an October 15th deadline.
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