August 31, 2018 / 8:05 AM / 3 months ago

Italy cabinet tensions rise over planned budget deficit: papers

FILE PHOTO: Italian Economy Minister Giovanni Tria attends as Prime Minister Giuseppe Conte (unseen) speaks during his first session at the Lower House of the Parliament in Rome, Italy, June 6, 2018. REUTERS/Tony Gentile/File Photo

ROME (Reuters) - One of Italy’s ruling parties, the 5-Star Movement, is pushing for a budget deficit next year that is triple the previous government’s goal and near double what Economy Minister Giovanni Tria is prepared to accept, Italian newspapers said on Friday.

La Repubblica reported that the anti-establishment party wants a deficit equal to 2.9 percent of gross domestic product, just within European Union fiscal rules.

Separately La Stampa reported that Tria, an academic with links to the center-right, was prepared to go to at least 1.5 percent, compared with the previous administration’s limit of 0.9 percent, but not much further because of fears of a sell-off in Italian bonds.

The 5-Star party came to office three months ago in a coalition with the right-wing League, with both promising a massive stimulus program of tax cuts, easier pension rules and a minimum income for the poor.

The coalition’s first budget is due to be unveiled in full by the end of October, and an expansionary budget could increase investors’ concerns over Italy’s heavy debt burden and risk a speculative attack on its financial markets.

The EU expects a “substantial effort” from Italy on its upcoming budget law, European Commissioner for Economic and Financial Affairs Pierre Moscovici told Italian financial newspaper Il Sole 24 Ore on Friday.

Reporting by Mark Bendeich; editing by David Stamp

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