ROME Italy will delay by a year its current plan to balance its budget in 2013, according to a draft forecasting document to be approved by the cabinet on Wednesday.
The draft Economic and Financial document, obtained by Reuters, raises the budget deficit forecasts for 2012-2014 and slashes this year's economic growth outlook.
The 2012 deficit target is increased marginally to 1.7 percent of gross domestic product from 1.6 percent, while the 2013 goal is raised to 0.5 percent from 0.1 percent.
The substantially balanced budget (a 0.1 percent deficit) is now targeted in 2014.
The economy is now forecast to contract by 1.2 percent this year, according to the document, compared with a 0.4 percent decline in GDP projected by Mario Monti's government in December.
The draft DEF forecasts that the public debt will rise this year to 123.4 percent of GDP from 120.1 percent in 2011, and fall in 2013 to 121.6 percent.
(Reporting by Giuseppe Fonte)