Brussels, 11/01/2006 (Agence Europe) - Economic and Monetary Affairs Commissioner Joaquin Almunia believes that measures to reduce Italy's budget deficit should bring Rome into line with the ECOFIN Committee recommendations that Italy reduce its 4.3% deficit for 2005 to below 3% in 2007 at the latest (see EUROPE 8989). Following a meeting with Italian Finance MINISTER Giulio Tremonti in Brussels on Tuesday, Mr Almunia told reporters he hoped that his “positive impression” would become “positive implementation”. Although 2006 is an election year in Italy, the Commissioner said he detected the political will to implement the measures effectively.
The Italian Government, which revised its plans upwards, has now fixed itself the target of reducing its budget deficit to 3.5% of GDP in 2006 (against 3.8% in September's draft budget). This appears to correspond to Council recommendations of measures representing 1.6% of GNP in 2006-2007 compared with 2005, with half of this coming in 2006. Mr Almunia told Press on Tuesday, “so far, according to our analysis of the budget and of the measures adopted, we think that the effort has been important” while stressing that monitoring continued beyond at the end of the year. “The Council has recommended Italy put the deficit below 3% at the end of 2007 and the efforts need to be continued because even if these targets are reached, the public debt levels continue to be high and more efforts will be required”, he pointed out. While Italy's stability programme provides for a greater reduction of the deficit, it re-values debt figures, even if the downward trend continues. The 2005 debt ratio was review upwards (from 108.2% of GDP to 108.5%) as were predictions for 2006 (from 107.4% to 108%) and the following years, with a target of 104.4% in 2008. In July 2005, the Council considered that the debt ratio should also drop to a satisfactory rate. The Commission will decide on how to proceed with the procedure on 22 February, Mr Almunia announced.