Rome

Balancing budget is not enough, warns Italian government

Economy minister confident of deal over budget measures

Balancing budget is not enough, warns Italian government

Rome, October 31 - Economy Minister Vittorio Grilli warned Wednesday that hitting the government's target of balancing the national budget next year is necessary to haul Italy out of the economic crisis, but it is not enough. Grilli said Rome also has to start making inroads to bring down the country's massive national debt, which Eurostat this month said has reached a record high of 126.1% in relation to gross domestic product (GDP). "Reducing the public debt is a fundamental commitment," Grilli said. "Balancing the budget in 2013 is a guarantee, but we know it's not enough. We have to do more," he added, citing the example of the need to identify public property that could be sold to raise revenue to cut the debt. The government said Italy should balance the budget in structural terms in 2013 after it passed a tough austerity package last year and recently presented new budget measures in the so-called Stability Law bill, which is currently in parliament. On Wednesday Grilli ruled out the hypothesis that it may be necessary to pass more budget measures early next year to balance the budget. He also said he was "very optimistic" that the government will find a compromise on amendments to the Stability Law, which has been blasted by the two main parties supporting Premier Mario Monti's emergency technocrat administration - the centre-left Democratic Party and ex-premier Silvio Berlusconi's centre-right People of Freedom (PdL) party. PD leader Pier Luigi Bersani has said his MPs would veto education cuts featured in the package. The PdL is unhappy about a 1% increase in value added tax and a retroactive reduction in tax deductions for the current tax year. The bill also features reductions in income tax in the two lowest bands and cuts to the national health system of over one billion euros.

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