ROME (AFX) - Bank of Italy governor Antonio Fazio forecast that the public deficit will be above 1 pct of GDP this year, the target fixed by the government.
In a speech at the bank's annual general meeting, Fazio said that in the first five months of the year the deficit for the central government stands at 74 trln lire compared with 50.6 trln a year earlier.
The widening of the deficit can be compensated by an immediate reduction in spending, he said, adding however that balancing of the public accounts has to be achieved through long-term action such as reform of the pension and welfare system, control over local government budgets and more efficiency in the public sector.
Fazio also forecast that GDP growth this year will reach 2.4 pct in the best case scenario.
Fazio added that consumer prices are expected to rise 2.8 pct this year and about 2.0 pct in 2002.