ROME, Sept 4 (Reuters) – Italy is poised to increase its 2023 budget deficit above the 4.5% of GDP target set in April due to the impact of costly fiscal stimulus for home improvements, two sources close to the budget said. He told Reuters on Monday.
Earlier this year, a ruling by the European Union’s statistics agency Eurostat on the ways in which tax breaks should be disaggregated in state accounts forced Italy to review its deficits from 2020 and 2022.
The government has already moved to limit incentives so as not to weaken state finances for this year, despite the contribution it has made to the construction sector and the economy in general during the Covid-19 pandemic.
However, the implementation of the schemes is still impacting Italy, where billions of euros in outstanding loans are expected to meet Eurostat’s criteria to add to the budget deficit this year, said the sources, who requested anonymity due to the sensitivity of the matter. .
The impact on the 2024 budget remains to be assessed and the government could take measures again to prevent further deviations from targets, the sources added.
One program, called Superbonus that offers generous incentives for energy-efficient home improvements, is approaching 100 billion euros ($108 billion) since it was originally introduced in 2020.
Economy Minister Giancarlo Giorgetti said on Sunday, “Thinking about the super bonus makes me sick because it has a negative impact on public accounts, swallows up economic policy and leaves no room for other interventions.”
He described the super reward as a banquet where everyone had a meal and the country was left with the bill.
Italy had already hinted in July that it was considering changes to these tax incentives as part of talks with EU authorities to renew its post-Covid-19 national recovery plan.
The Government will update a set of economic forecasts by 27 September through the Treasury’s Economics and Finance (DEF) document.
As Italy prepares a tough 2024 budget amid a bleak economic outlook, Giorgetti reaffirmed a commitment to keeping the deficit and debt on a downward trend, leaving little room for stimulus. ($1 = 0.9273 euros)
Edited by Lincoln Feast.
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