ROME: The Italian government believes a better macroeconomic outlook and lower interest rates have given it leeway to spend some 3 billion more euros, or at least 0.2 percent of GDP, on measures to support growth, two government sources said on Wednesday.
The estimate comes before the 2015 Economic and Financial Planning Document (DEF), which is expected to be released at the end of next week and which Economy Minister Pier Carlo Padoan said would be "as expansive as possible".
Speaking in parliament, he said Italy would make full use of new European Union rules that, under certain circumstances, give countries reforming their economies more flexibility in applying the rules.
"The DEF and the budget law last year were already expansive. From this year, there are new clauses.
We will use the margins that the rules give us," he said. Italy has been forecasting a 2015 budget deficit of 2.6 percent of gross domestic product, so an increase of around 0.2 percentage points would still leave it within the EU's 3 percent of GDP deficit limit.
However, it is not clear whether the government will actually have to increase the deficit forecast.
Tentative signs of economic recovery and the European Central Bank's bond-buying programme, which has driven borrowing costs to record lows, have improved the overall outlook for government finances. Italy has been struggling to get out of the longest recession in its post-World War Two history.
At the same time, it faced heavy pressure last year to keep its budget within EU limits.
Recent data has offered fresh encouragement, with lower oil prices, a weaker euro and the ECB's ultra-expansive monetary policies providing a more favourable basis for recovery.
On Saturday, Maria Elena Boschi, one of the members in Prime Minister Matteo Renzi's cabinet, said the DEF would probably have a new 2015 GDP growth forecast of 0.7 percent, up slightly from the previous estimate of 0.6 percent.
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