CERNOBBIO, Italy - European Union Commissioner for Economy Paolo Gentiloni said on Saturday he was confident an agreement over re-implementing EU budget rules would be reached by year-end, ruling out an extension of their suspension into 2024.

The EU rules, called the Stability and Growth Pact, have been on hold since 2020 to help governments deal with the COVID-19 pandemic and the impact of Russia's February 2022 invasion of Ukraine on energy and food prices.

The rules, which limit budget deficits and debt, are due to be re-implemented in 2024 and the EU is racing to establish a new rule book acceptable to all member states, with Italy favouring a more lenient approach than some northern European governments.

"I'm confident, I'd say I have to be confident, that a deal (over the new budget rules) can be reached by year-end," Gentiloni told reporters on the sidelines of the European House Ambrosetti economic forum in Cernobbio.

"Suspension won't be extended to 2024," he added.

Gentiloni's comments appeared to contrast with remarks on Monday by Italian Economy Minister Giancarlo Giorgetti, who said a deal was probably out of reach by the end-2023 deadline, something the European Commission was now coming to terms with.

Italy is preparing a difficult 2024 budget in which it will seek to meet Prime Minister Giorgia Meloni's tax-cutting promises while at the same time reducing the deficit while faced with an economic slowdown.

Gentiloni said failing to reach a deal on reviving the rules would mean a return to previous budget rules that did not help promote economic growth and cut sovereign debt in the bloc.

He said European Central Bank (ECB) President Christine Lagarde "often reminds us that reaching this agreement is also fundamental in the overall assessment that the ECB makes of the market situation".

State support and investment programmes to counter COVID's economic impact sent many EU states' debt levels soaring beyond the Stability Pact's current 60% of GDP limit REUTERS