* Renzi to present new economic targets at around 1730 GMT
* May give little detail on funding for promised tax cuts
* 2014 growth seen at 0.8 pct, deficit/GDP at 2.6 pct
* Renzi enjoying honeymoon period but big hurdles ahead
By Stefano Bernabei
ROME, April 8 Italian Prime Minister Matteo
Renzi said on Tuesday he had found ways to fund a pledged 7
billion euro tax cut this year, moving to reassure sceptics and
European officials that Italy does not plan to upend its public
finances to fuel economic growth.
Speaking to reporters before a cabinet meeting to lay out
his new government's economic goals, Renzi shrugged off
scepticism from opponents that a set of tax cuts were an
electioneering gambit ahead of next month's European elections.
"The tax cuts are funded from the very first day. You people
don't believe it but we have been ready for three weeks," said
Renzi, who took office in February after ousting predecessor
Enrico Letta in a party coup.
Renzi will hold a news conference at around 1930 (1730 GMT)
after a cabinet meeting called to sign off on the Economic and
Financial Document (DEF) which sets the framework for budget
plans over the next three years.
The DEF is expected to cut the previous government's growth
forecast for this year, but make little change to targets for
the fiscal deficit. The draft document must be presented to the
European Commission for its approval.
"We only hope Renzi doesn't cook the books because the
judges aren't only in Italy but also in Europe," said Renato
Brunetta, lower house leader of Silvio Berlusconi's centre-right
opposition party Forza Italia.
Most of the revisions to economic and public finance targets
have been leaked in recent days, so attention at the news
conference is likely to focus on any information Renzi offers on
how he will fund his tax cuts.
He has promised to reduce income tax on low earners by 80
euros per month from May, costing the state some 7 billion euros
this year and 10 billion thereafter, and to finance the cuts
mainly by reducing public spending.
However Renzi, a consummate television performer who is
already campaigning for European Parliament elections in May,
may give little detail and instead use the news conference to
focus on popular moves with little impact on public accounts.
These are likely to include plans to capping the pay of top
public sector managers and scrapping some particularly
superfluous public bodies.
The 39-year-old former mayor of Florence is enjoying a
honeymoon period with Italian voters who have warmed to his
dynamism and quick-fire, informal communication style.
He promised reporters on Tuesday the cabinet meeting and
news conference would "all be over in time for the evening
His centre-left Democratic Party (PD) commands more than 30
percent of the vote in opinion polls, giving it a comfortable
lead over the anti-establishment 5-Star Movement and Forza
Italia, which both have less than 25 percent.
But Renzi must still tread carefully. He has many enemies in
his own PD party and among trade unions, and his popularity
could easily evaporate if and when he takes tough decisions that
threaten public sector jobs and vested interests.
In the face of an icy reception from the European Commission
Renzi appears to have already backtracked from an original plan
to fund the tax cuts partly by increasing government borrowing.
The target for the budget deficit this year is likely to be
raised only marginally to 2.6 percent of output, from 2.5
percent, government sources have said, meaning the bulk of the
tax cuts will need to be funded by lower spending.
Renzi can count on some savings from lower debt servicing
costs thanks to the recent fall in yields on Italian government
bonds. But most economists believe his new, lower forecast for
economic growth this year is still too optimistic.
The International Monetary Fund on Tuesday forecast Italy
will grow by just 0.6 percent this year after two years of
contraction, while the DEF is expected to cut the government's
official projection to 0.8 percent from 1.1 percent.
(Writing by Gavin Jones; Editing by Alessandra Galloni and