“The Commission concluded that an excessive deficit procedure against Italy by virtue of the debt is not justified at this stage,” Economics Commissioner Pierre Moscovici said.
The decision by the commission, the EU's executive arm, comes after Italian Prime Minister Giuseppe Conte said his country's public deficit is “perfectly on track” to reach 2.04 percent of gross domestic product in 2019.
Italiam Prime Minister Giuseppe Conte. Photo: Bertrand Guay/AFP
At the start of June, Brussels formally put Italy on notice about its deteriorating deficit and snowballing debt and opened an excessive deficit procedure which could result in an unprecedented fine of more than €3 billion for the country.
The European Commission in October rejected the big-spending budget submitted for approval by the Italian coalition government of the hard-right League and the anti-establishment Five Star Movement.
Rome and Brussels then agreed on the 2.04-percent figure in December, but the Italian government was forced to raise the forecast to 2.4 percent in March given the deteriorated economic outlook.
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The cabinet calculated at a budget meeting late Monday that some €6.24 billion of additional revenues would now be coming in this year, while expenditure would rise only by an extra €130 million. Furthermore, a huge chunk of money earmarked for early retirement payments and a citizens' income for the less well-off has been frozen due to lower than expected demand.
So the overall deficit for this year would be around €7.6 billion lower than anticipated, the cabinet said in a statement late on Monday.