Italy is hoping the impending revisions to GDP growth data for 2020/22 will curb what would be a robust overrun of the country's budget deficit target for this year.

This is according to two sources with knowledge of the matter, Reuters news agency reports.

Italy's national statistics bureau will publish the GDP revisions, ISTAT, on Friday, and the Treasury forecasts higher figures that will have a positive impact on this year's finances, the two sources added.

Prime Minister Giorgia Meloni, in April, set a deficit target of 4.5% of GDP in 2023 and 3.7% in 2024. However, both targets are now threatened by adjustments related to billions of Euros in financial incentives for home improvements.

Implemented in 2020, these incentives already resulted in an overshoot in the deficits for the past three years, following a ruling on the tax credits by the EU's statistics agency, Eurostat.

The 2022 fiscal gap was 8.0% of GDP, compared to the official 5.6% target.

Eurostat is shortly scheduled to make a further announcement on the building incentives situation, which would drive Italy's 2023 deficit over the 4.5% target, say sources.

As such, the country's deficit looks as though it will stay high or higher than other eurozone countries.

Indeed, the deficit-to-GDP ratio for Germany stood at just 2.6% in 2022 and is forecast at 2.5% this year. Yet France and Spain forecast their deficits for this year at 4.9% and 3.8%, respectively.

Nevertheless, ISTAT unveiled an upward revision last week for 2021 GDP of between 1.8% and 2.1%, in nominal terms, and Italy is confident there will also be a considerable increase in real (inflation-adjusted) growth for the past two years, with optimistic insinuations for this year.

Italy is set to publish its new economic projections by 27th September within the Treasury's annual Economic and Financial Document (DEF).

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