Italy set next year’s deficit target at 2.4 per cent of economic output with a commitment to reduce it to 2.1 per cent in 2020 and 1.8 per cent in 2021.
The government also promised Italy’s public debt would drop to 126.5 per cent of GDP from its current 131 per cent by 2021.
Italian Prime Minister Giuseppe Conte made the announcement after a government budget summit on Wednesday.
“We are respecting the promises we made,” Conte said.
“This is a serious budget, responsible and courageous. Our country needs strong growth.”
The news sent Italian government bond yields down, and overnight the euro gained against the dollar.
Italy’s leading stock exchange, Milan’s FTSE MIB, closed up 0.9 per cent following days of tumbling share prices.
Conte and his government came to power in June and promised to cut taxes and increase welfare spending.
They also argued their ambitious plan will boost economic growth and reduce Italy’s mammoth public debt, which is the second-highest in Europe after Greece.
The coalition’s deficit goal for next year is triple that of 0.8 per cent of GDP promised by former prime minister Paolo Gentiloni back in April.
