ECB presses Italy to strengthen fiscal position
The European Central Bank pressed Italy on Thursday to further strengthen its fiscal position, arguing that weaker-than-expected economic developments mean the government may miss its current 2014 deficit target.
Italian Prime Minister Matteo Renzi said on Tuesday that the country's economic growth would be about "zero" this year, a sign the euro zone's third-biggest economy is struggling to climb out of its third recession in six years.
"Risks surrounding the achievement of the government's 2014 deficit target (2.6 percent of GDP) remain, especially in the light of economic developments being worse than expected," the ECB said in its September monthly bulletin.
"Looking ahead, it is important to further strengthen the country's fiscal policy position in order to ensure compliance with the requirements of the Stability and Growth Pact, especially those concerning the reduction of the general government debt-to-GDP ratio," it added.
Renzi has repeatedly promised to keep Italy's deficit within the European Union's limit of 3 percent of GDP but is expected to revise the 2.6 percent forecast in the next budget planning document due in October.
In an interview with the Financial Times last month, he said he expected the deficit would reach 2.9 percent of GDP.