By Giada Zampano

ROME -- The European Commission has asked Italy to reduce its 2017 budget deficit by about EUR3.4 billon ($3.64 billion), an Italian Treasury official said, to avoid an excessive-deficit procedure that could include fines.

The request, included in a letter delivered Tuesday and published on the Italian Treasury's website, is being evaluated, a Treasury official said.

"The Italian government is in talks with the Commission and in the next few days will decide whether and how to intervene," he added.

European Commission spokesman Margaritis Schinas said the letter is "part of the ongoing dialogue between the commission and the Italian authorities."

The commission asked Italy to respond with a list of specific commitments by Feb. 1, when it publishes its 2017 winter economic forecasts.

Rome and the commission, the European Union's executive arm, have often clashed over Italy's expansive budget policies. A new disagreement with the commission would be an additional headache for the new government led by Prime Minister Paolo Gentiloni, who faces some tough challenges.

In October, the Italian government approved a budget of about EUR27 billion, which included a higher than-expected 2017 deficit target of 2.3% of gross domestic product, due to extraordinary spending related to a summer earthquake and the migrant crisis.

In November, the Commission warned Italy that its budget measures risked violating the bloc's spending rules and urged Rome to ensure that it meets EU's debt reduction targets.

The EU introduced stricter fiscal rules for countries using the euro in 2013 as a response to the sovereign-debt crisis, which had put the future of the Euro Zone at risk. The main goal of these rules is to keep public debt in check. Italy has the second largest debt in the eurozone, at more than EUR2.2 trillion.

Italy's Economy Minister Pier Carlo Padoan on Monday didn't rule out corrective measures to comply with the commission's requests. Mr. Padoan cited deflation and bad market conditions as the main reasons for the government's difficulties in cutting the country's debt load.

The commission can impose fines of up to 0.2% of GDP on eurozone countries that repeatedly ignore recommendations to fix their budget problems.

Viktoria Dendrinou contributed to this article.

Write to Giada Zampano at giada.zampano@wsj.com

(END) Dow Jones Newswires

January 17, 2017 14:14 ET (19:14 GMT)

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