Italy agrees partial budget change with EU Commission - newspaper

ROME (Reuters) - Italy has partially resolved a dispute over its 2015 budget with the European Commission, which had questioned its decision to push back targets for debt reduction, a senior Italian official said in a newspaper interview on Sunday.

The EU's executive Commission said last week that Italy's 2015 budget showed a "significant deviation" from its previous plan to achieve a balanced budget in structural terms, or adjusted for swings in the business cycle, originally scheduled for 2015, then 2016.

But cabinet undersecretary for European affairs Sandro Gozi told La Nazione newspaper a partial agreement had been reached.

The dispute with Brussels revolves around the technical issue of Italy's structural deficit, which the budget presented last week proposed to reduce by 0.1 percent of output next year. An EU source said the commission was looking for a 0.7 percent cut.

"We agreed with the outgoing commission headed by (Jose Manuel) Barroso to adjust our deficit-GDP ratio by 0.3 percent, from the 0.1 percent adjustment previously planned," Gozi said.

The draft budget presented on Oct. 15 by Italian Prime Minister Matteo Renzi includes 18 billion euros (14.16 billion pounds) in tax cuts and pushes back the target date for achieving a structural balanced budget by another year to 2017.

Gozi said Economy Minister Pier Carlo Padoan was working on other areas of the budget, and would send a response to the commission's questions about its budget by Monday.

Italy has been pushing the commission to agree that the parlous state of its economy, which has contracted by 9 percent since 2007, and its proposed slate of economic reforms justify waiving EU debt reduction rules temporarily.

(Reporting by Isla Binnie; Editing by Catherine Evans)