ROME (Reuters) -Italy will soon leave the European Union’s excessive deficit procedure as it is close to bringing its budget shortfall to 3% of gross domestic product (GDP), the president of the European Central Bank said on Monday.
Being under a so-called “excessive deficit procedure” reduces countries’ room for manoeuvre on tax and spending because EU rules oblige them to cut their fiscal gap by a prescribed amount each year until it falls to 3% or below of GDP.
ECB President Christine Lagarde mentioned Italy’s improving fiscal prospects while discussing the budget crisis in her native France, where the government is at risk of collapsing in a confidence vote next week.
“Italy is making very serious budgetary efforts today and will probably exit from (the EU procedure), getting soon to a deficit of 3%,” Lagarde said in an interview with Radio Classique.
Economy Minister Giancarlo Giorgetti said in July that Italy could bring its deficit below 3% of GDP as early as 2025, paving the way for exiting the EU procedure in 2026, one year ahead of schedule.
In April, the government pledged to cut the deficit to 3.3% of GDP this year from 3.4% in 2024, and to 2.8% in 2026.
Italy is due to update its growth forecasts and deficit and debt targets this month under the so-called Document of Economy and Finance (DEF).
(Reporting by Giuseppe FonteEditing by Alvise Armellini and Frances Kerry)
