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Italian official budget deficit
leaps to 9.3pc of GDP
MILAN — The Italian public deficit jumped to 9.3 per cent of output
in the first quarter of the year, the highest level for at least 10 years,
official data showed yesterday. The ratio of the overall public deficit to
gross domestic product is the highest since the series of statistics began
in 1999, the official statistics institute Istat said.
In the same period of last year, the deficit was 5.7 per cent of output. In
the first quarter of this year, revenues for the state fell on a 12-month
comparison, owing to the economic crisis, and public spending increased. The
primary deficit, overspending excluding the added burden of interest
payments on past deficits, was 4.6 per cent of output in the quarter from
0.8 per cent 12 months earlier. Istat noted that these figures were
unadjusted and therefore subject to big changes from one quarter to the
next.
The figures were not exactly the same as those notified to the European
Commission because they did not include so-called swap operations involving
financial instruments. The government forecast that for the whole of this
year it will show a public deficit of 4.6 per cent of gross domestic product
after 2.7 per cent last year. It expected the figures in 2010 to show a
deficit of 4.6 per cent, and then 4.3 per cent in 2011.
It expected the debt, comprising accumulated past annual deficits, to rise
to 113 per cent of GDP this year, to 117.1 per cent in 2010 and 118.3 per
cent in 2011. The government has increased spending to combat the effects of
the crisis but has not launched a massive stimulus plan because the huge
debt limits its room for manoeuvre. Consequently it has tried largely to
increase spending in some areas by re-directing expenditure from other
sectors of the economy.
The government was also expected to announce some form of amnesty for people
who have money abroad and are illegally avoiding taxes, on payment of a
fine, as a means of obtaining revenue and increasing resources in the
economy. EU rules require a country to contain its public deficit within 3
per cent of output to move towards a surplus in times of growth, and to
target a maximum debt of 60 per cent of output.
— AFP |