By Giuseppe Fonte ROME, April 21 (Reuters) - Italy aims to bring its budget deficit below the European Union's 3% of GDP ceiling this year despite a weakening growth outlook due surging energy costs
Italy Targets 2026 Budget Deficit at 2.8% of GDP Amid Economic Slowdown
Italy's Fiscal Strategy and Economic Outlook
By Giuseppe Fonte
Government's Budget Deficit Goals
ROME, April 21 (Reuters) - Italy aims to bring its budget deficit below the European Union's 3% of GDP ceiling this year despite a weakening growth outlook due surging energy costs and Middle East turmoil, sources close to the matter said.
The government is set to publish its multi-year budget framework (DFP) on Wednesday, containing new forecasts for gross domestic product and public finances.
Revised Growth and Deficit Projections
The document is likely to forecast that under an unchanged policy scenario the euro zone's third largest economy will grow by around 0.5% this year and 0.6% in 2027, the sources said, down from targets of 0.7% and 0.8% set by the government in September.
The budget deficit is seen falling to around 2.8% of GDP this year from 3.1% in 2025, and to around 2.6% in 2027, broadly in line with the targets set last autumn, the sources said.
A spokesperson for the Treasury declined to comment.
Impact of Geopolitical Uncertainty
All estimates, still subject to changes, will be projections under un unchanged policy scenario, rather than official targets, which the government says cannot be made due to the intense geopolitical uncertainty triggered by the U.S.-Israeli war against Iran.
Pressure on ISTAT and Deficit Reporting
PRESSURE ON ISTAT
Upcoming Data Releases and Expectations
Before the cabinet meets, at 0900 GMT EU statistics agency Eurostat and Italy's statistics bureau ISTAT will publish data on the 2025 deficit, with Rome hoping for a downward revision to 3% from the 3.1% that ISTAT estimated in March.
A 3% deficit, as the government had targeted for 2025, would enable Italy to exit an EU disciplinary procedure this year for its "excessive" deficit, provided Brussels is convinced the improvement in its accounts is permanent.
Media Scrutiny and Official Statements
ISTAT has come under pressure this week from pro-government media to revise down its previous estimate, with the bureau's president Francesco Maria Chelli issuing a statement on Monday denying he had called on ISTAT's statisticians to tweak the numbers.
Italian EU Affairs Minister Tommaso Foti said on Tuesday the 2025 deficit may be reported as low as 2.9%.
"I hope that nobody is playing against Italy," he told TV broadcaster La7, without naming ISTAT directly.
(Writing by Gavin Jones, editing by Alvise Armellini)
