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FILE PHOTO: Italian Minister of Labor and Industry Luigi Di Maio speaks at the Italian Business Association Confcommercio meeting in Rome, Italy, June 7, 2018. REUTERS/Tony Gentile/File Photo


ROME (Reuters) - Italy should scrap a clause in its constitution obliging it to run a balanced budget, deputy Prime Minister Luigi Di Maio said, adding that the government was not yet working on the matter.

"I think that in future it should be cancelled," Di Maio said in a television interview on Thursday evening.

Di Maio said getting rid of the clause was in the "contract" drawn up by the ruling coalition made up of his own 5-Star Movement and the right-wing League before it took office in June.

He said the government was now concentrating on keeping its pledges to guarantee a minimum income for the poor, cut taxes and reform the pension system to make it possible to retire earlier.

The balanced budget constitutional amendment was approved by parliament in April 2012 during the euro zone debt crisis, under the government led by Mario Monti.

It had been presented the previous year by Monti's predecessor Silvio Berlusconi in an effort to calm financial markets as Italy's borrowing costs increased.

The clause came into effect from 2014 but since then Italy has never achieved a balanced budget and parliament has voted to make a temporary exception each year to approve the governments' spending plans.

The new 5-Star/League administration says the best way to bring down public debt is by investing more to boost economic growth, rather than try to balance the budget each year.

The government contract said the balanced budget rule needed changing because it "makes it impossible to adopt effective anti-cyclical policies."

However, Prime Minister Giuseppe Conte said on Wednesday the government had no plan to scrap the balanced budget clause.

"It's there and it's staying there," he said when asked about the issue at a news conference.

(Reporting By Gavin Jones; Editing by Catherine Evans)

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