Italian economic blueprint approved

DEF provides snapshot of country's financial state

Italian economic blueprint approved

(By Kate Carlisle) Rome, April 10 - The Italian government's economic blueprint for 2013, the Economy and Finance Document (DEF), was approved by outgoing Premier Mario Monti's cabinet on Wednesday. The DEF provides a snapshot of the state of the recession-hit Italian economy, as well as indicating policies and measures Rome intends to put into place to promote growth. The DEF needed to be approved quickly to meet a European Union deadline that says it must be delivered to Brussels by April 20. As expected, the document leaves some aspects open-ended, given the political deadlock that has followed February's inconclusive general election, so the future executive can knock it into the shape it sees fit. Monti said that the "work in progress still needs fine tuning, but that it is an "important contribution" while the country's politicians continue their struggle to form a government. It will, however, "ensure harmony between national policy priorities and the European Union," Monti said. Italy is on course to hit its target of balancing the budget in structural terms this year, caretaker Premier Monti said after his cabinet approved the economic blueprint. A country is considered to have balanced its budget in structural terms if government revenues match expenditure when the data is adjusted to take account of fluctuations in the business cycle. According to the DEF, the deficit for 2013 should be 2.9% of gross domestic product (GDP) in absolute terms. This is below the 3% threshold allowed by the European Union, which means Italy should emerge from the procedure it is under for excessive deficit. "The public finances are on a sustainable path," Monti, whose emergency technocrat administration passed a series of austerity measures after taking power at the peak of the eurozone crisis in November 2011, told a press conference. "The target of balancing the budget in structural terms has been hit". European Economic Affairs Commissioner Olli Rehn on Wednesday also said it was "very probable" that Italy will exit the excessive-deficit provisions under the European Union's Stability and Growth Pact once data had been reviewed by Eurostat on April 22. Economy Minister Vittorio Grilli said Wednesday that the government expects Italy's gross domestic product to fall by 1.3% this year. However, Grilli told reporters at the presentation of the DEF that Italy's GDP should increase 1.3% in 2014 after pulling out of the recession in the second half of 2013. He said growth should be 1.4-1.5% in 2015. Italy plans to raise GDP yearly through 2017 with privatizations. The DEF "includes revenues from privatization equal to approximately 1% of GDP each year," from 2013 to 2017, Monti said following its approval.

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