MILAN (Reuters) - Italy can convince the European Commission to grant it further budget leeway if it presents new spending measures aimed at spurring corporate investments, Industry Minister Carlo Calenda was quoted as saying on Saturday.
In an interview with la Repubblica daily, Calenda said it made no sense that so-called "flexibility" clauses, allowing a country deficit spending margins if it carried out reforms or to invest, could be used only for one year.
Under such clauses, Italy has won permission to increase its previously agreed deficit goal for 2016 by 14 billion euros (£12.13 billion).
The government's growth and deficit targets for this year and the next are again seen at risk after economic expansion unexpectedly ground to a halt in the second quarter.
Italian media have reported Rome wants to request further budget flexibility, dropping its current 2017 deficit of 1.8 percent of gross domestic product. The Treasury has dismissed any forecast as "groundless" saying it was still too early.
Calenda however confirmed Italy would seek further deficit spending margins.
"We need to expand the scope (of the flexibility clauses) in terms of duration and size," he said. "If we present Europe and the markets a credible plan ... based on stimulus measures for investments and firms' competitiveness we should be able to get what we need."
The European Commission has already remarked that Italy, alone among EU countries, had received an "unprecedented amount of flexibility."
Financial markets keep Italian public finances under close scrutiny due a public debt that runs at more than 1.3 times domestic output and chronically languishing growth.
Calenda said the government - which in the past has sought to revive growth with an 80-euro-a-month tax break for low-income workers - needed to turn its attention to the economy's supply side.
"Demand stimuli will not work in the current climate of generalised uncertainty which is here to stay ... the next budget law should target investments and competitiveness."