Italy's populist government worked "with tenacity" to successfully avert sanctions from the European Union over its big-spending budget, while keeping its key electoral pledges and boosting the economy, premier Giuseppe Conte said on Wednesday.
"We worked with tenacity to avoid an infraction procedure," Conte told the Italian upper house of parliament, referring to an EU disciplinary proceedings that can result in fines, cuts in EU funding and other financial sanctions, as well as prolonged market pressure.
Conte confirmed earlier remarks by the European Commission on Wednesday that Italy has agreed to lower its planned budget deficit from 2.4 percent to 2.04 percent in 2019, with further cuts over the following two years.
"The deficit to GDP ratio will fall next year from 2.4 percent to 2.04 percent with a target of 1.8 percent in 2020 and 1.5 percent in 2021," Conte told the Senate.
During the negotiations to avoid disciplinary action over Italy's spending plans, EU officials had shown "rigidity" but had also been "open to dialogue", Conte said, noting that he had resisted calls for even greater cuts and had honoured the government's main promises.
"We quantified the costs of the various budget measures, especially social and pensions spending and found these required less resources than previously estimated," Conte said.
"This allowed us to cut the deficit target from 2.4 percent to 2.04 percent without altering the contents of the budget, those eligible for the measures or the timeframe," Conte stated.
"The 'quota 100' pension reform and the citizen's wage will start as planned (early next year)," Conte said, referring to reforms that will lower the retirement age for some workers and give a basic income to Italy's poorest.
The value of Italy's concessions is understood to be just over 10 billion euros.
Conte also confirmed that the government had lowered its economic growth forecast for 2019 from 1.5 percent to 1.0 percent.
"Following a worsening of the international outlook and a slowdown of the business cycle, gross domestic product is seen growing by 1.0 percent next year," Conte stated.
Valdis Dombrovskis, the commission vice-president in charge of financial stability, said earlier on Wednesday that Italy's agreed budget "still raises concern".
But Dombrovskis said the deal meant disciplinary action could be avoided - "provided that the agreed measures are fully implemented".
While Italy's spending is below the 3 percent deficit rule - which many countries, like France, exceed - its debt pile is the second-highest in Europe, and the main concern for EU officials was that it should not increase.
European officials had felt the Italian government's expectation of 1.5 percent growth was overly optimistic.
The budget deal still needs to be approved by the Italian parliament by the end of the year.
