Italy plans to confirm its commitment to reduce its deficit to zero.GDP The Treasury expects the medium-term structural budget plan to be presented in mid-September to reduce the funding ratio below the European Union’s 3 percent ceiling in 2026, sources close to the matter told Reuters.
This year, the EU put Rome under the so-called Excessive Deficit Procedure and its new budget framework, which aims to narrow the fiscal gap in line with EU prescriptions, must also comply with the bloc’s latest reform of fiscal rules.
The infringement procedure requires Italy to reduce its structural budget deficit, net of one-off factors and fluctuations in the economic cycle, by 0.5% or 0.6%. GDP per year.
The new fiscal rules call for a slow but steady pace of deficit and debt reduction beginning in 2025 over four to seven years.
The sources, who asked not to be identified due to the sensitivity of the matter, said the Treasury sees Italy’s deficit in line with budget estimates outlined in April and May.
At the time, the government promised to reduce the fiscal gap to 3.6 percent. GDP in 2025, from the 4.3 percent projected this year, and to 2.9 percent in 2026, although levels are slightly higher under current trends.
Italy’s deficit in 2023 rose to 7.4 percent. GDPthe highest in the eurozone, driven by generous incentives for energy-saving home improvements, the so-called Superbonus.
The structural budget plan, which provides the framework for the 2025 budget, must be submitted to EU authorities by 20 September.
While promising to rein in the deficit, Prime Minister Giorgia Meloni’s government repeatedly said it intended to extend until 2025 temporary cuts to social contributions and tax cuts for people earning up to 28,000 euros ($31,125) a year.
Both measures are currently in force until December and extending them to next year will cost the state coffers around 15 billion euros.
Separate sources said the government was also working on another package of tax cuts aimed at helping people earning up to 60,000 euros.
Neither source clarified how the government plans to finance the measures.
Meloni will meet key members of his coalition on Friday to discuss Rome’s budget plans.
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