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Italy hikes 2021 budget deficit to 11.8% of GDP: source

FILE PHOTO: A view of the empty St. Mark's Basin as the region of Veneto becomes a 'red zone', going into lockdown in an effort to reduce coronavirus disease (COVID-19) infections in the country, in Venice, Italy, March 15, 2021. REUTERS/Manuel Silvestri/File Photo

ROME (Reuters) - Italy has hiked its target for this year’s budget deficit to 11.8% of gross domestic product from an 8.8% projection made in January, a government source told Reuters.

The new target is contained in the Treasury’s annual Economic and Financial Document (DEF) which Mario Draghi’s cabinet approved at a meeting on Thursday.

The new target for the fiscal gap incorporates the impact of a 40-billion-euro stimulus package which the cabinet signed off on at Thursday’s meeting, the source said. Italy has not posted a double-digit deficit since the early 1990s.

The DEF contains multi-year targets for the GDP, the budget deficit, and public debt, which are expected to be officially announced shortly.

Reporting by Giuseppe Fonte, writing by Gavin Jones, editing by Angelo Amante