August 7, 2018 / 8:03 AM / in 3 months

Italian ministers to hold budget meeting on Wednesday

ROME (Reuters) - Senior officials in Italy’s eurosceptic government will meet on Wednesday to discuss next year’s budget, Deputy Prime Minister Luigi Di Maio said on Tuesday.

FILE PHOTO: Italian Deputy Prime Minister Luigi Di Maio speaks in Rome, June 7, 2018. REUTERS/Tony Gentile/File Photo

The executive that took office in Rome in June has flagged ambitious spending plans that have raised concerns on financial markets.

In an interview with Radio24, Di Maio said the government would hold several meetings on the budget, including one on Wednesday. On Monday, he had said the government would only apply European Union fiscal rules if they did not impede its reform agenda.

Prime Minister Giuseppe Conte said last week the government’s ruling coalition had reached a compromise on the budget’s outline.

Investor unease at the mixed messages has driven a selloff of Italian debt that on Friday briefly pushed yields on 10-year bonds IT10YT=RR above 3 percent for the first time since June.

While yields IT2YT=RR IT10YT=RR have since pulled back, analysts said on Tuesday the market remained vulnerable.

Di Maio told Radio24 the government planned to cut company tax contributions for employees and reform pensions. He confirmed the executive would respect electoral pledges to cut corporate and individual income taxes while increasing financial support for the unemployed.

It is unclear at this stage how these measures will be financed. Italy has the highest debt in the European Union after bailed-out Greece.

The government needs to agree its fiscal plan for next year by September and must present a draft budget to the European Commission by mid-October.

After the budget meeting last week, Economy Minister Giovanni Tria, an economics professor seen as more fiscally moderate than most of his cabinet colleagues, said the outline was compatible with EU targets, which require Italy to reduce its debt.

But Di Maio cast doubt on that view on Monday, echoing remarks a day earlier from Matteo Salvini, who leads the other partner in the governing , the far-right League.

Reporting by Francesco Guarascio; editing by John Stonestreet

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