November 21, 2018 / 10:46 AM / 20 days ago

Italy's Salvini says 2.4 percent deficit target not negotiable

FILE PHOTO: Italy's far right leader and Interior Minister Matteo Salvini attends a a news conference with French far right leader Marine Le Pen in Rome, Italy October 8, 2018. REUTERS/Max Rossi/File Photo

ROME (Reuters) - Deputy Prime Minister Matteo Salvini said on Wednesday he was not open to negotiations over Italy’s deficit target of 2.4 percent of gross domestic product next year, though other aspects of the budget could be discussed.

The European Commission has rejected Rome’s expansionary 2019 budget because it reverses a commitment to reduce borrowing made by the previous government.

The EU executive is expected on Wednesday take the first step towards disciplining Italy over the budget, backed by euro zone governments worried that Rome’s borrow-and-spend plans could trigger another debt crisis that would hurt them all.

“We are always open to dialogue, we can talk about investments, but not about the 2.4 percent deficit or the reform of the Fornero (pension) law,” Salvini told reporters in parliament.

The Commission says Italy must do more to bring down its huge public debt of more than 130 percent of GDP, proportionally the second highest in the euro zone after Greece’s.

It rejects the government’s argument that by expanding the budget it can boost growth and revenues, bringing down the debt as a proportion of GDP.

“The debt will fall if the economy grows,” Salvini said, adding that people should have no doubt over the stability of the often fractious ruling coalition of his right-wing League Party and the anti-establishment 5-Star Movement.

National statistics institute ISTAT said earlier on Wednesday that the budget would help Italy’s flagging economy by boosting domestic demand. It forecast growth would accelerate slightly to 1.3 percent next year from 1.1 percent in 2018.

Reporting by Giuseppe Fonte, writing by Gavin Jones; Editing by Crispian Balmer

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