European Union officials have told Italy it should move faster in getting public finances in order as Rome prepares its 2008 budget.
Jean-Claude Juncker, chairman of euro zone finance ministers, said Italy was party to an agreement that all euro group nations should balance their budgets by 2010, even though Rome continues to set itself a target of 2011.
Italy has exceeded the EU's 3 per cent of GDP ceiling for the last four years, and last year's deficit of 4.4 per cent was the highest since 1996.
The meeting of central bankers and finance ministers in Porto is Europe's first collective brainstorming session in response to global financial market turmoil.
Portugal, which holds the European Union's rotating presidency, said yesterday it hoped the two-day meeting would help produce a shared analysis of a problem that could hit economic growth in the region.
High oil prices and the strength of the euro's exchange rate were also to be discussed in the first such meeting since the ECB began a wave of emergency action on August 9th to try to combat a credit crunch in panic-struck financial markets.
The current credit crunch started as a debt defaults crisis in the US subprime mortgage market but has snowballed into a broader credit crunch, fuelled by concern over levels of exposure to various types of debt derivatives.