Unless Rome makes concessions this week on its spending plans for 2019 and 2020, the EU Commission is expected on July 2 to open a disciplinary procedure against Italy for excessive debt.
Economy Minister Giovanni Tria voiced confidence on Tuesday that Rome would reach a deal with Brussels to avoid disciplinary action and confirmed Italy would cut its 2019 deficit target to around 2.1% of gross domestic product from 2.4%.
The coalition of the anti-establishment 5 Star Movement and the far-right League party is due to formalise the new target on Wednesday, and also to discuss a deficit goal for 2020.
However, 5 Star and the League are in disagreement over the latter's plan to give greater fiscal autonomy to the rich northern regions, il Corriere della Sera said.
The 5-Star, whose voters are mainly rooted in the poor south, refused to support the proposal, the daily said, adding that Wednesday's meeting was likely to be called off.