EU May Forecast Italy 2019 Deficit at 2.6% of GDP: Repubblica

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The European Commission may warn of a widening Italian deficit, which could lead to a recommendation for a budget adjustment, La Repubblica reported, without saying where it got the information.

The European Union executive, which announces its spring economic forecasts on May 7, may report an estimate of 2.6 percent for Italy's deficit to gross domestic product this year, the newspaper said. That's higher than the government's 2.4 percent target, raised last month from an original 2 percent commitment.

The structural deficit, which excludes one-off expenditures and the effects of the economic cycle and is a key figure for EU budget rules, is forecast to worsen by 0.2 to 0.3 percentage points this year.

The EU may also forecast Italian debt will reach 134 percent of GDP this year, higher than the 132.6 percent government target, the newspaper said. Based on the new predictions, the commission may recommend in June that Italy cut its deficit by 33 billion euros ($37 billion), which includes 23 billion euros of VAT hikes that Italy already wants to replace with other measures, la Repubblica said. In a worst-case scenario, the commission could open an infringement procedure, which could lead to fines.

Italian Finance Minister Giovanni Tria has repeated that the country will meet its EU budget commitments.

To contact the reporter on this story: Marco Bertacche in Milan at mbertacche@bloomberg.net

To contact the editors responsible for this story: Christopher Kingdon at ckingdon@bloomberg.net, Richard Bravo, Stephen Kirkland

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