ROME, Sept 19 - Italy's budget deficit will not come close to the European Union's ceiling of three percent of GDP in 2004 despite extra state spending on growth-boosting measures, Labour Minister Roberto Maroni said on Friday. The government reached an agreement over the 2004 budget on Thursday that will allow five to six billion euros spending to foster growth, at the cost of a higher deficit. Asked whether the measures would push the budget deficit close to the EU's Stability and Growth Pact ceiling, Maroni said: "No, that risk does not exist."
Deputy Economy Minister Mario Baldassarri said on Thursday the growth-boosting measures would inevitably have an impact on Italy's 2004 deficit, but did not specify what the new target would be. The government's official forecast is 1.8 percent of GDP. A government source said on Thursday the target could be raised to 2.1 percent of GDP if the ruling coalition agreed on much-needed pensions reform -- an agreement which coalition members later said had been reached. The core part of pensions reform, as it is shaping up, will not come into effect until 2008, so the package is not expected to have an impact on the 2004 budget. But Economy Minister Giulio Tremonti believes that the European Union will accept a higher-than-forecast deficit next year if Italy enacts a structural reform on its pensions system which is aimed at guaranteeing long-term budget stability.//