EU relaxes rules for Italy
World Trade;Troy;Aug 2002;Anonymous

Issue: 	 8 	 
Start page: 	 22 	 
Document Type: 	 News 	 
Source Type: 	 no data 	 
ISSN: 	 10548637 	 
General Subject Terms: 	 Federal budget 	 
 	 Waivers 	 
 	 Economic policy 	 
Geographic Names: 	 Italy 	 
UMI Article Re. No.: 	 WLD-2078-13 	 
UMI Journal Code: 	 WLD 	 

   

Copyright Business News Publishing Company Aug 2002
  
Abstract:  
  
   Officials from the European Union have consented to Italy's request to waive the country's obligation to balance its budget next year, allowing it to have a budget deficit of up to 0.5% of GDP.

Full Text:  
  Officials from the European Union have consented to Italy's request to waive the country's obligation to balance its budget next year, allowing it to have a budget deficit of up to 0.5 percent of GDP 

The decision is good news for Italian Prime Minister Silvio Berlusconi, as he can now proceed with infrastructure projects that will create more jobs. The government will also have additional leeway to pursue income tax cuts for low income households and reduce corporate taxes from 36 percent to 35 percent. 

Berlusconi had pledged to cut taxes this year during his 2001 election campaign. However, budgetary constraints and a weak economy prevented him from following through on his intentions. 

In the meantime, while Italy hopes to have a budget deficit of 0.5 percent of GDP this year, government officials say they are allowed to hit 1 percent under the euro zone stability pact rules if the economy is weak. Many economists estimate the country's deficit this year will actually fall between 1.2 and 1.4 percent of GDP, as a result of slower than anticipated economic growth.