* Padoan says impact on budget goals from reform drive still
* Says closer to EU Commission growth forecast than last
(Adds comment on growth)
By Francesco Guarascio
BRUSSELS, March 10 Italy will have to wait to
judge whether planned structural reforms will affect its ability
to meet strict European Union budget limits, Economy Minister
Pier Carlo Padoan said on Monday.
Italy, struggling to recover from its worst economic slump
since World War Two, has kept to EU rules limiting budget
deficits to 3.0 percent of gross domestic product for the past
two years, but its public debt is the second highest in the euro
zone behind Greece at almost 133 percent of GDP.
Speaking after a meeting with euro zone finance ministers in
Brussels, Padoan said it was generally accepted that structural
reform measures take time to bear fruit and can pose a temporary
burden on public finances.
"These are policy measures which produce growing effects as
time passes. In the meanwhile they can have implications for
public finances in the sense that they can temporarily weigh on
public finances," he said.
He said it would take "some years, not many but more than
one", to reach a full assessment of the impact of reforms.
"Naturally, there could be implications for the profile of
public finances which would of course be clearly linked to the
structural measures. This is the principle. Whether this leads
to respecting the limits with greater or lesser precision is
something we don't know. We will see."
Padoan made no comment on whether the government would ask
for any extra budget flexibility to cope with the added costs of
structural reforms on its already badly strained finances.
"I haven't said we'll ask, I've said we'll do things and
then we will assess the implications as the indicators tell us
whether the measures have been successful, what the
macroeconomic situation is and so on," he said.
Before taking office, new Prime Minister Matteo Renzi stated
several times that Italy could seek more leeway on deficit
limits to make room for spending on investment and measures to
Last week, the European Commission warned Italy, which saw
its economy contract by 1.9 percent last year, that it would
have to take decisive action to correct its very high debt level
and weak competitiveness.
Padoan said the government would give its response once the
Commission presented its formal report.
But he indicated that he had a less optimistic view on
prospects for the economy than the last government, which
forecast growth of 1.1 percent in 2014 and said he was closer to
the Commission's forecast of 0.6 percent growth.
"Forecasts naturally have a role for purposes of statistics.
The numbers which we have at the moment are probably closer to
the Commission's than they were in the past," he said.
(Writing by James Mackenzie; Editing by Mark Heinrich)