Italy Substantially Meets EU Budget Rules, Finance Minister Says

(Bloomberg) -- Finance Minister Giovanni Tria is confident Italy will avoid a European censure over its excessive debt and that it can do so by cutting spending rather than raising taxes.

“Italy is substantially compliant with the European fiscal rules and I’m optimistic,” Tria said in a speech in Monte Porzio Catone, near Rome, on Tuesday. “I don’t see obstacles to an agreement.”

Tria is leading the efforts by Prime Minister Giuseppe Conte’s government to rein in the spending promises of the populist coalition’s political chieftains, Deputy Premiers Matteo Salvini and Luigi Di Maio.

While lower outlays and higher revenue may narrow the deficit this year, promises to slash taxes and introduce a minimum wage threaten the finance minister’s pledge to maintain fiscal prudence.

“For the future the idea is to keep the deficit low and continue in the objective of decreasing debt, not through higher taxes but through lower current expenditures,” the minister said. “This is our commitment with parliament and we are working to fulfill this mandate with the next budget law.”

Italy’s government has won an extra week to get its act together and avert an infringement procedure by the European Union, according to an EU official speaking on condition of anonymity because discussions are private.

The official warned that what Italy has offered so far isn’t enough to stop Brussels from starting a so-called excessive deficit procedure, something that would most likely happen on July 2.

To contact the reporter on this story: Alessandro Speciale in Rome at aspeciale@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Jerrold Colten, Dan Liefgreen

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