The new Italian government agreed on Monday to a blueprint for the country’s 2020 budget that stays close to European Commission guidelines on the debt and deficit, avoiding an increase in the national value-added tax.
Monday’s late-night deal came a day after negotiations with the four members of the ruling coalition failed to agree on a set of goals for the budget outline. The main disagreement was over the value-added tax increase, which is set to kick in on Jan. 1 unless the government could come up with at least 23 billion euros (25.1 billion U.S. dollars) in cost savings that would render the increase unnecessary.
Prime Minister Giuseppe Conte broke the deadlock when he announced before the start of Monday’s talks that he had cobbled together the cash needed.
Roberto Gualtieri, the minister of finance, declared the budget plan “ambitious” and “fair.”
The plan estimates that the budget deficit will be the equivalent to 2.2 percent of the country’s gross national product next year, slightly higher than the 2.1 percent goal stated before the start of negotiations. But analysts said it was probably close enough to the goal to avoid problems with the European Commission.
“This new government is a Europe-friendly government working on a budget to reflect that,” Fedele De Novellis, head of the macroeconomic forecasts and analysis team with REF Research, told Xinhua. “It is reasonable to expect some flexibility on the part of the commission.
The plan predicts the Italian economy will grow 0.6 percent next year. That is above most estimates from investment banks and multilateral organizations.