MILAN Italy should seek two more years to meet its deficit targets, new deputy economy minister Stefano Fassina said in a newspaper interview on Sunday, underscoring splits within the ruling coalition on the central issue of austerity versus growth.
"I consider it absolutely necessary," Fassina, a leading critic of Europe's austerity programs, told La Repubblica daily.
"If several countries - not just Spain and France, but also Portugal, Greece, Ireland, the Netherlands and Slovenia - have already won more time to meet the 3 percent deficit target (of GDP), why not Italy?" he said.
Italy has committed to keeping its budget deficit at 2.9 percent of gross domestic product in 2013, just under the European Union's 3 percent ceiling.
Economy Minister Fabrizio Saccomanni, considered close to European Central Bank President Mario Draghi, ruled out trying to win extra leeway on the budget deficit as recently as Thursday.
Fassina was named last week as one of two deputy economy ministers to Saccomanni, the orthodox former director general of the Bank of Italy.
Italy expects to emerge this month from the so-called excessive deficit procedure it has been under for breaking through the budget ceiling in previous years.
Fassina said conditions were in place for the EU to close that procedure on May 29, but after that Italy should assess the sustainability of the targets set by the government of former Prime Minister Mario Monti in line with EU requirements.
He said the new right-left coalition government led by Enrico Letta had "more strength" in Europe to negotiate extra leeway because it could rely on support from opposition parties - including the anti-establishment 5-Star Movement of comedian Beppe Grillo.
"Italy can go to Brussels with a very ample parliamentary backing," said Fassina, who was previously economic affairs spokesman for Letta's center-left Democratic Party.
"Austerity has failed, now it is time to focus on growth and all march together in the same direction."
Like many of his counterparts in Europe, Letta faces the challenge of meeting his country's fiscal commitments while trying to coax a sickly economy back to life. He has pledged to cut taxes but has not said how he will pay for it.
Several senior members of the ruling coalition, including center-right leader Silvio Berlusconi, have told Letta he should raise Italy's deficit targets.
(Reporting By Silvia Aloisi; Editing by Hugh Lawson)