Italy mulls delaying target of balanced budget until 2014-source

Reuters

By Giuseppe Fonte

ROME (Reuters) - Italy is struggling to keep its deficit below the European Union ceiling this year - just months after being taken off a blacklist of countries with excessive budget gaps, government sources said on Wednesday.

The deficit is currently on track to come in at 3.1 percent of output this year, but the government is determined to make sure it does not exceed the EU's 3 percent ceiling, a source said.

The person, who spoke on condition of anonymity, also said the Economy Ministry was considering delaying its aim of achieving a balanced budget in structural terms until 2014, a year later than the original target of this year.

Prime Minister Enrico Letta inherited the pledges to stay under the EU ceiling and reach a balanced budget in structural terms from previous governments.

However, Economy Minister Fabrizio Saccomanni has said repeatedly that Italy will ensure its public deficit respects the EU limit in nominal terms, without the accounting adjustments.

Italy's longest recession in six decades has weighed on public finances, and the 2.9 percent deficit goal for 2013 has appeared to slip out of reach, especially as Letta's government has been paralysed by in-fighting.

A delay in reaching the medium term goal of a balanced budget in structural terms should not present problems for Italy with European authorities, as Brussels has allowed member states more time to reach the target as long as the nominal target of 3 percent of GDP is respected.

(Writing by James Mackenzie and Steve Scherer; Editing by Barry Moody and Hugh Lawson)

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