ITALIAN Prime Minister, Mr Romano Prodi, strongly criticised the European Commission yesterday for forecasting that Italy was lagging on a key single currency goal, saying it had not taken account of all available data.

"The government considers the Commission's decision to forecast at this stage a financial unbalance, albeit minimal, in a member state that has already taken necessary and correct steps to cut the deficit . . . is incomprehensible," Mr Prodi said in a statement released by his office as he was en route to Kuwait.

Earlier, the Commission said the ratio between Italy's deficit and gross domestic product (GDP) was set to hit 3.2 per cent this year and 3.9 per cent in 1998 against the 3 per cent threshold laid down by the Maastricht Treaty.

Mr Prodi said the forecast did not take into consideration all the data supplied by Italy on its budget outlook.

"The government . . . is deeply committed to following its own action of structural reform which will enable Italy to arrive at the single currency date with all its papers in order," Mr Prodi's statement said.

A decision is due to be made in May, 1998, on which European Union states should qualify for monetary union on the basis of their 1997 economic performance.

Soothing words from the Commission that Italy might meet the Maastricht goal if recent budget action was fully effective did little to appease the anger of Mr Prodi's centre left allies.

"This (report) is a sign of prejudice against Italy rather than a serious financial analysis," said Mr Lanfranco Turci, the economic spokesman for the Democratic Party of the Left (PDS), the largest party within Prodi's coalition.

Both the IMF and Commission indicated that Italy had introduced too many one off budget measures in its drive to be among the first wave of countries signing up to the single European currency, scheduled for launch in 1999.