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. Last Updated: 07/27/2016

Italy to Be Disciplined Over Budget

ROME -- The European Commission has rejected Italy's defense of its budget deficit and will proceed with disciplinary action, newspaper La Repubblica reported on Wednesday, quoting EU documents. The Commission launched a sanctions procedure against Italy on June 7, after its deficit broke the EU limit of 3 percent of gross domestic product.

Prime Minister Silvio Berlusconi retorted that there was nothing wrong with Italy's budget, and the Treasury outlined reasons why its deficit had breached the cap.

La Repubblica, citing EU documents, said each of these excuses had been rejected at an EU committee meeting on Tuesday.

The document said the Italian deficit "was neither exceptional or temporary" and was "the result of a long period of low growth." The deficit could not be attributed to a "grave recession," as claimed by Italy, because the country's recession began only in the final quarter of 2004, La Repubblica said.

The EU committee found Italy's contributions to the EU budget remained static at 0.06 percent of GDP in 2003 and 2004, while funds for peacekeeping were also unchanged over that period at 0.1 percent of GDP.

Italy breached the 3 percent of GDP deficit cap in 2003 and 2004 and is likely to do so in 2005 and 2006, the Commission estimates.