ROME (Reuters) - Economy Minister Pier Carlo Padoan said on Monday it was too soon to say if Italy needed additional measures to reduce the budget deficit this year, as fresh doubts arose over its economic outlook.

"We'll see if further measures are necessary," Padoan told state broadcaster RAI after the newspaper la Repubblica said the European Commission wanted Rome to commit by Feb. 1 to cut its deficit by an extra 3.4 billion euros ($3.6 billion) this year.

Italy has set a deficit goal of 2.3 percent of gross domestic product (GDP) for 2017, up from the 1.8 percent previously agreed with Brussels.

Padoan said the European Commission was concerned about Italy's public debt, the highest in the euro zone after Greece's, which did not fall last year as Rome had promised.


He said this had been due to price deflation and difficult market conditions that had prevented planned privatizations. Padoan pledged to resume sell-offs of public firms this year.

He also said he was "a bit surprised" by the International Monetary Fund, which earlier on Monday cut its growth forecasts for Italy for both this year and next -- the only major industrialized nation to see its forecasts lowered.

The IMF said it saw GDP growth of 0.7 percent in 2017 and 0.8 percent in 2018 -- a reduction of 0.2 and 0.3 percentage points respectively over its previous forecasts.

By contrast, it saw GDP growth of 1.6 percent this year and next in the euro zone as a whole.

Speaking in the United States, IMF Chief Economist Maurice Obstfeld highlighted the bad loans weighing on Italy's banking sector as one of the obstacles to growth.

The government has set aside 20 billion euros to support Italy's troubled banks, about a third of that for Monte Dei Paschi di Siena, the fourth-largest.

Some analysts have said this will not be enough to overcome the long-running banking crisis, but Padoan dismissed this. "The 20 billion is more than enough," he said.

(Reporting by Crispian Balmer; Editing by Kevin Liffey)

Latest From ...