BRUSSELS (Reuters) - Italian Economy Minister Pier Carlo Padoan has said he expects the European Commission to issue its evaluation of Italy’s 2015 budget on Oct. 29, a timetable which under EU rules would indicate the draft submitted by Rome had been rejected.
The budget outlined last week by Prime Minister Matteo Renzi and submitted to Brussels for approval sticks to the EU’s deficit limit of 3 percent of GDP but cuts the deficit more slowly than promised in so-called “structural” terms, adjusted for the business cycle.
“We’re in contact with the Commission. On the 29th the Commission will express its assessment,” Padoan said in an interview with RAI state television on Sunday.
However under the reporting timetable laid down by the European Union, an assessment issued by the end of the month would almost certainly mean the budget plans had been rejected, an examination of the rules shows.
Under tightened-up European Union budget rules adopted last year, euro area member states have to submit their draft budget plans by Oct. 15 every year for approval by the European Commission. The Commission is meant to pass the plans by Nov. 30.
However, in cases where the Commission identifies any particularly serious non-compliance with EU budget rules, it has two weeks to issue an assessment asking for the finance plans to be reworked to bring them into line.
“Any opinion issued by the European Commission on Oct. 29, that is within two weeks of the presentation of a euro zone country’s draft budget plans, would be in order to request a modification of the programme,” said a European Union official, who declined to be cited by name.
A spokesman for the Economy Ministry in Rome declined to elaborate on Padoan’s comments.
Hit by a worse-than-expected economy, which the government expects to contract by 0.3 percent this year, Italy has put back balanced budget targets promised to the EU earlier this year.
Prime Minister Matteo Renzi submitted budget plans last week which foresee the structural budget deficit cut by just 0.1 percent of gross domestic product, more slowly than promised. A European Union official told Reuters last week, the Commission expected a correction of 0.7 percent of GDP.
Instead of the budget being brought into structural balance by 2016 as earlier promised, the target will now be reached in 2017, according to the draft plans.
In recent days, a number of European Union sources have said that Italy’s budget plans risked rejection although the issue has been complicated by the impending handover to a new European Commission on Nov. 1.
Incoming Commission President Jean-Claude Juncker is widely expected to adopt a more compromising line than his predecessor Jose Manuel Barroso and negotiating corrections to the plans could take some weeks.
Reporting by Francesco Guarascio and Giselda Vagnoni; Writing by James Mackenzie; Editing by Alison Williams