Italy structural deficit consistent with EU rules: document

Reuters News
Posted: Apr 19, 2012 6:24 AM

ROME (Reuters) - Italy's revised budget plans are consistent with attaining a "sizable" primary surplus and achieving a balanced budget in the medium term, according to an internal European Commission document obtained by Reuters.

The assessment comes after Italy delayed a plan to achieve a balanced budget by 2013 and cut its 2012 economic forecast to show a 1.2 percent contraction. Rome now expects to achieve a budget deficit of 0.5 percent in 2013 with a 4.9 percent primary balance, excluding interest payments.

A "next crucial step" for Italy is the approval of Prime Minister Mario Monti's labor market reform, which is now in parliament, and tackling structural weaknesses in order to boost potential growth, the document said.

"The government's policy response has so far been determined and wide-ranging. It has to be implemented in full and as a matter or urgency," the document said.

With national elections next year, a continuation of "sound" budget policies "beyond 2013" is essential, according to the commission.

(Reporting by Francesco Guarascio. Writing by Steve Scherer.)