June 5, 2019 / 5:13 PM / 11 days ago

Italy's government sees deficit at 2.1% after EU move

ROME (Reuters) - Italian Prime Minister Giuseppe Conte’s office said on Wednesday the government wanted constructive talks with Brussels to reach a deal over 2019 budget targets, after the European Commission issued a warning over Rome’s finances.

“The government hopes for the continuation of a constructive dialogue with the Commission in order to reach an agreement on the ways in which the objectives for the current year will be achieved,” Conte’s office said in a statement.

The European Commission had said Italy was in breach of EU fiscal rules because of its growing debt, a situation that justifies the launch of a disciplinary procedure.

Conte’s office said Italy’s deficit-to-GDP ratio for 2019 would come in at 2.1%, well below the official 2.4% target.

The government said the lower deficit target would be achieved thanks to savings in the 2019 budget.

“According to our figures, the lower expense will amount to 0.07% of GDP”, which roughly corresponds to 1 billion euros ($1.1 billion).

The two ruling parties, the anti-establishment 5-Star Movement and the far-right League, in January approved income support payments for the poor and measures to allow people to retire earlier. Critics said these were too much for Italy’s strained public finances.

The Commission said on Wednesday that the new retirement scheme was “worsening the sustainability of public finances in the medium term”.

The Italian Treasury published a report on Saturday saying the deficit could be reduced by using 2 billion euros in unexpected dividends from the Italian central bank and state-owned enterprises.

Reporting by Angelo Amante and Giuseppe Fonte; Editing by

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