BRUSSELS Italy may get to deduct some investment spending from deficit calculations under guidelines drafted by the European Commission, but the deduction is likely to be smaller than Rome had hoped for.
The Commission asked EU finance ministers this week to release Italy from the EU's budget blacklist, called the excessive deficit procedure (EDP), after the country brought down its shortfall to within the EU limits, despite a recession.
This paves the way for Rome to benefit from a potential deduction for countries that keep within the rules of some types of investment from deficit calculations, although the scope of the deductions is still under discussion.
The Commission will publish a report on the issue in the middle of June, but one Commission official said countries should "not exaggerate the leeway" they were likely to be given.
Italian Finance Minister Fabrizio Saccomani estimated the potential benefits of such investment deductions for Italy at between 10-12 billion euros earlier this month.
But Commission officials were much less upbeat.
"The (report) due on June 19, as it is now... puts too restrictive limits on the (type of) investments, with the result that the impact to spur growth will be almost null," another Commission official said.
Officials said that, most likely, governments which do not break the EU deficit limit of 3 percent, will be allowed to disregard in their deficit calculations part of the money they spend to co-finance investment projects funded by the EU.
European Union countries with regions that are poorer than the EU average, receive funds from the EU budget to finance various projects that will raise the standard of living in these areas. Governments pay between 5 and 50 percent of the cost of a project and the rest of the money comes from the EU.
Italy, while wealthy overall, has regions in the south that receive EU funds to help their development.
($1 = 0.7660 euros)
(Reporting By Jan Strupczewski Editing by Jeremy Gaunt.)