Updated April 3rd, 2024 at 14:00 IST

EU authorities to initiate infringement procedure against Italy due to excessive deficit

Under the infringement procedure, Italy will be required to reduce its structural deficit by a minimum of 0.5% of GDP annually.

Reported by: Business Desk
Italy flag | Image:Pexels
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Excessive deficit: Italy's Economy and Finance Minister announced on Wednesday that European Union authorities are set to initiate an infringement procedure against Italy and several other countries for excessive deficit.

Minister Giancarlo Giorgetti stated during a parliamentary hearing that the European Commission is expected to recommend to the Council the opening of an excessive deficit procedure against Italy, among others. This decision comes as Italy anticipates a deficit-to-GDP ratio for the current year, which aligns closely with its 4.3 per cent target set in September, surpassing the 3 per cent ceiling established by EU regulations.

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Under the infringement procedure, Italy will be required to reduce its structural deficit by a minimum of 0.5 per cent of GDP annually. The latest revision of the EU's fiscal rules, aimed at a gradual deficit and debt reduction starting from 2025, offers a timeframe of four to seven years for compliance, with the longer duration applicable for countries implementing reforms and investments aligned with EU priorities.

Italy is expected to provide updated economic projections by April 10 through the Treasury's Document of Economy and Finance (DEF). Additionally, the country is preparing its fiscal adjustment plan, slated for submission to the European Commission by September 20.

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In efforts to maintain fiscal stability, Minister Giorgetti proposed that state-controlled companies retain their liquidity in a current account with Italy's Treasury. This measure is part of Italy's strategy to manage strained state finances effectively.

(With Reuters inputs) 

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Published April 3rd, 2024 at 14:00 IST