ROME (Reuters) – Italy is likely to achieve a primary budget balance this year, excluding interest payments on public debt, the government said on Monday.
Economy Minister Giancarlo Giorgetti said this as Rome prepares a medium-term structural budget plan to submit for approval by the European Commission.
The country aims to achieve a large primary surplus over time to keep under control its massive public debt, which stands at around 140% of GDP, the second-largest in the eurozone after Greece.
“I think that by 2024 we will reach the goal of balancing the primary budget,” Giorgetti said at an event in Parma.
The minister’s comments point to a slight improvement in the country’s public finances, after the Treasury in April forecast a primary deficit of 0.4% of GDP for 2024.
This year, the EU has subjected Italy to a so-called excessive deficit procedure, with the nominal deficit for 2023 reaching 7.4% of GDP, the highest among eurozone countries.
In the budget plan, which will be sent to Brussels by early October after parliamentary approval, the Treasury will confirm its previous commitment to reduce the deficit to below the 3% of GDP ceiling in 2026.
Rome also intends to commit to the recent reform of the EU’s fiscal rules, which requires a slow but steady pace of debt and nominal deficit reduction from 2025 over four to seven years, depending on strategic reform and investment commitments.
To that end, the Treasury this week pledged to limit the average annual increase in Italy’s net primary spending, an indicator that measures the components of spending under direct government control, to around 1.5%.
The government will present its comprehensive budget plan next week, taking into account the impact of upcoming revisions to economic growth data for the period 1995-2023 by Istat.
“The historical GDP series will see an upward correction, modest but upward. However, this will not be the solution to the problems,” Giorgetti said.
The minister also said he wanted to not only confirm, but “make the wedge cut and the three interest rate cuts structural.”
Both measures are currently in force until December and extending them would cost the state treasury around €15 billion per year.
(Translated by Chiara Scarsiglia, edited by Sabina Sozzi)
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