ROME (Reuters) - Italy said on Wednesday it was ready to increase revenues and cut spending to meet Brussels' concerns about its 2017 budget, which the European Commission has said does not respect the European Union's fiscal rules.
In a letter to the Commission, Economy Minister Pier Carlo Padoan outlined measures Italy was ready to adopt in 2017 to avoid being put on the Commission's blacklist of non-compliant countries.
In a Jan. 17 letter, the Commission had asked Italy to cut its budget deficit this year by some 3.4 billion euros ($3.66 billion) more than Rome had targeted in its 2017 budget.
Italy will "adopt the necessary measures," Padoan said in his letter to Commission Vice-President Valdis Dombrovskis and Economic and Financial Affairs Commissioner Pierre Moscovici, but he did not make any reference to size of the adjustment.
The letter, posted on the Treasury's website, said the fiscal correction would be contained in a multi-year budget plan, known as the Economic and Financial Document, to be presented in April.
Three quarters of the adjustment will come through revenue-raising measures, the letter said, and the remaining quarter by spending cuts.
On the revenue side, it will include raising indirect taxes and excise duties, as well as efforts to combat tax evasion, Padoan said.
He added that Italy's economic growth last year "probably exceeded" his most recent 0.8 percent forecast, without giving a new estimate. The data will be released on March 1.
Italy has been wrangling with the Commission since it announced a 2017 budget last autumn that exceeded previously agreed deficit targets. The Commission is particularly concerned by Italy's public debt, which at around 133 percent of gross domestic product is the highest in the euro zone after Greece's.
Rome's 2017 budget deficit goal is currently set at 2.3 percent of GDP, up from 1.8 percent agreed previously with Brussels.
Italy's so-called "structural" deficit, adjusted for swings in the business cycle and one-off items, is set to rise by 0.6 percent of GDP this year, flouting EU rules that require it to fall by 0.5 points per year until reaching balance or surplus.
The letter from the government of Prime Minister Paolo Gentiloni, who took over from Matteo Renzi less that two months ago, now puts the ball back in Brussels' court.
Rome's offer does not commit explicitly to any precise figures and is also vague on when the measures will become law. It says only that they will be adopted "within the timeframe of the approval of the Economic and Financial Document."
