By Giovanni Legorano

ROME-Italy must keep its pledge to reduce its massive debt, although economic growth must accelerate to meet the government forecasts for this year, Italy's Economy Minister Giovanni Tria said Tuesday.

Speaking in the lower house of parliament, Mr. Tria said lower debt will help economic growth and reassure markets about the solidity of the country's finances and economy.

"A lower level of debt reduces the expenditure for interests, freeing up margins in the country's budget to reinforce growth and inclusion," he said, adding that markets react on the perceived dynamic of national debt rather than on its level.

Mr. Tria also said that keeping the country's pledge to reduce its debt, which is about 132% of gross domestic product, will put Italy in a stronger position to claim in Europe that investments must be accounted for differently than current expenditures.

This could lead to a much-needed "European plan of investments of which Italy must be a promoter," he said.

Mr. Tria's speech is among his first official comments since he took office in the new Italian government supported by the maverick 5 Star Movement and the hard-right League, which both pledged to help propel economic growth with public investments, also financed by higher deficits.

The two parties also plan to push for a reform of the eurozone rules underpinning the bloc's economic governance, something Mr. Tria's echoed in its speech.

"Our action in Europe must be directed to a deep reform of the economic institutions governing the eurozone," he said.

Mr. Tria cautioned that worsening international conditions, especially the implementation of protectionist policies, are creating less favorable perspectives for Italy's economic growth and finances.

He said that the second-quarter's output was in line with the first, but that it must accelerate in the second part of the year to meet current economic forecasts for 2018.

Rome predicted the economy will grow 1.5% this year and 1.4% the next.

Write to Giovanni Legorano at giovanni.legorano@wsj.com

(END) Dow Jones Newswires

June 19, 2018 08:46 ET (12:46 GMT)

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