Italy aims to reduce its public deficit to below 3% of its gross domestic product (GDP) by 2026, according to government sources. This target aligns with the 2.9% goal set in April of this year, and the government is expected to unveil a new budget proposal in the coming weeks. Prime Minister Giorgia Meloni recently adjusted Italy’s growth forecast for 2025, raising it to 1% from the previous 0.6%, reflecting a modest improvement in economic conditions despite ongoing global tensions. The Organization for Economic Co-operation and Development (OECD), an international organization that provides policy recommendations for member countries, has also revised its forecast for Italy’s economic growth. It now expects Italy to grow by 0.9% in 2026, up from its earlier estimate of 0.5%. In contrast, the OECD lowered its growth forecast for France to 0.4%, a decline of 0.3 percentage points. Italy’s public deficit is expected to reach 5.4% of GDP this year, according to available data. Meeting the 3% deficit threshold is crucial for Italy to exit the European Union’s excessive deficit procedure (PDE), a monitoring process that applies to member states whose budget deficits exceed the EU’s limit. Economy Minister Giancarlo Giorgetti has made exiting the PDE a key long-term goal. However, the national statistics institute, ISTAT, confirmed that the 2025 budget deficit reached 3.1% of GDP, contradicting the government’s earlier claims of a potential downward revision. Additionally, ISTAT revised last year’s deficit upward by 550 million euros. Giorgetti acknowledged that Italy will not be able to exit the PDE this year, as previously hoped, and that the exit might occur in 2027. For that year, Italy expects a budget deficit of 2.8% of GDP. Before approving Italy’s exit from the PDE, the European Commission will need to be convinced that the country’s budget consolidation plan is sustainable and viable in the long term.