Prime Minister Giuseppe Conte said Italy’s 2019 budget deficit would be “significantly better” than has been forecast (FREDERICK FLORIN)

Rome (AFP) – Italy’s Prime Minister Giuseppe Conte has pledged to abide by EU fiscal rules, while insisting his country’s financial health is on the mend, despite its slowing economy.

“We do not intend to ask for exceptions or concessions with respect to the regulations,” Conte said in a letter sent to his EU counterparts late Wednesday and posted on the government website Thursday.

The European Commission has sounded the alarm over the deterioration of Italy’s public finances, leaving Rome scrabbling to convince it not to go ahead with threatened disciplinary procedures.

The PM stressed, however, the “urgent need to launch a discussion” within the EU on a “profound revision” of the rules.

“The balance of public accounts… cannot be the only reference parameter for economic and social policy”, he said.

Conte said the 2019 budget deficit, currently forecast to come in at 2.4 percent of output, would be “significantly better” than expected, and the structural deficit would fall by 0.2 percentage points next year.

The far-right League and anti-establishment Five Star Movement coalition government has enacted two major reforms — universal income and steps to facilitate early retirement.

But they have cost less than forecast, in part because there has been less demand than expected.

Italy’s government risks being hit by unprecedented sanctions for running a huge debt and breaking spending promises to the EU, including a fine of three billion euros ($3.3 billion).

Italy’s colossal public debt stood at 132.2 percent of GDP in 2018, well above the 60 percent threshold set by European rules.

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.