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(M2) Correction Extends


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(M2) Corrective Cycle Remains In Play


(M2) Gains Still Considered Corrective

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--Lega Sees Decision At Crunch 4 p.m. Meeting
--Compromise Seen Possible At 2%-2.5% GDP
By Silvia Marchetti
     ROME(MNI) - A decision on Italy's 2019 fiscal deficit will come at a crunch
meeting between Finance Minister Giovanni Tria and the ruling coalition's two
party chiefs, with a government source saying a compromise was possible in the
range of 2% -2.5% of GDP.
     Asked if Tria was sticking to his insistence that the deficit should not
exceed 1.6% of GDP, another source, in the minister's own ministry, told MNI
that "things had changed."
     A decision will be taken when Tria meets the Five Star Movement's Luigi Di
Maio and the far-right Lega's Matteo Salvini, together with Prime Minister
Giuseppe Conte, at 4 p.m. local time, although it will only be made public after
a cabinet meeting due four hours later, a source close to the Lega said.
     With the deadline for the government to hammer together a fiscal framework
looming at midnight Thursday, Di Maio and Salvini want spending to push closer
to the 3% limit under EU rules. A compromise is looking likely at somewhere
above 1.8% of gross domestic product, possibly in the 2%-2.5% range, the
government source told MNI.
     The budget package will include tax cuts promised by Lega, including
gradual adjustments to income and business levies, the source close to Lega told
MNI. Lega is also continuing to push for "crucial" changes to pension laws which
would allow workers to retire once the sum of their age and years of
contributions reaches 100, the source said.
     A government source with links to Lega had told MNI early in September that
the coalition government was ready to fully "stretch" the EU's 3% deficit-to-GDP
rule but without breaching it and would not ask the European Commission for any
extra fiscal leeway.
--MNI London Bureau; +44208-865-3829; email:
[TOPICS: MFIBU$,M$E$$$,M$I$$$,M$X$$$,MI$$$$,MX$$$$,MFX$$$,MGX$$$]

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