ROME (Reuters) -Italy’s budget deficit could fall below the European Union’s ceiling of 3% of gross domestic product (GDP) this year, ahead of time, Economy Minister Giancarlo Giorgetti said on Saturday.
The government pledged in April to cut the fiscal deficit to 3.3% of GDP this year, down from 3.4% in 2024, with a further decline to 2.8% expected in 2026.
But a steady increase in tax revenue has raised the prospect of faster-than-expected deficit reduction.
In the first seven months of the year, tax revenue rose on an annual basis by 5.3% or more than 16 billion euros ($18.79 billion) in absolute terms.
When asked about the possibility of the deficit dropping below the 3% ceiling as early as this year, Giorgetti said: “It is possible.” He made the comments while attending a meeting of EU finance ministers in Copenhagen.
Reducing the fiscal deficit to less than 3% of GDP this year would allow Italy to exit the EU infringement procedure for excessive deficits by mid-2026. Brussels started disciplinary budget steps against Italy in 2024.
These restrict countries’ flexibility with regard to taxation and spending policies as they must cut their fiscal deficit by a prescribed amount each year.
“The opportunity to exit the procedure is real, and it is in the country’s interest to seize it,” Giorgetti said.
($1 = 0.8515 euros)
(Reporting by Giuseppe Fonte. Editing by Jane Merriman)
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