Italy’s foreign minister says that the severe restrictions in the country can defeat coronavirus.
Luigi di Maio
By Mark Lowen
BBC Rome correspondent
Economic policies implemented by the populist government in Rome make Italy vulnerable to a crisis of market confidence, with the poorest likely to suffer the most, the International Monetary Fund has warned.
"The authorities' policies could leave Italy vulnerable to a renewed loss of market confidence," an IMF annual report on the country says.
"Italy could then be forced into a notable fiscal contraction, pushing a weakening economy into a recession. The burden would fall disproportionately on the vulnerable."
On January 31, official data showed that the Italian economy, the eurozone's third largest, contracted in the fourth quarter of 2018, which meant the country was in a technical recession.
But Italy's deputy prime minister and M5S leader Luigi Di Maio quickly rejected the report, saying the IMF "has starved people for decades" and lacked the credibility to attack policies.
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Mario Draghi was asked about Italy during his press conference at the European Central Bank.
Now Italy's Deputy Prime Minister Luigi Di Maio - seen here celebrating when the budget was first announced - has told reporters in Rome that the government is "attentive and vigilant" over its banks.
There are worries about the Italian banking sector because of their holdings of Italian government debt, where yields are rising after Brussels called for the country's budget to be redrafted.
Mr Di Maio said if any bank need extra capital, this could be done "in lots of ways".
He had said in a radio interview earlier that Italy was not going to leave the euro.
"Markets are not concerned about Italy not respecting the EU budget rules. Investors are worried about false storytelling according to which Italy wants to leave the euro and the European Union. That is not the case".
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The euro is trading lower against the dollar and the yen as Italy's coalition government prepares to outline its first budget targets - potentially putting it on a collision course with the European Union.
The single currency is down 0.28% on the greenback at $1.1708 and is lower on the yen at ¥131.8550.
Coalition parties Five Star Movement and the far-right League want to uphold their populist promises they got them elected but may be hampered by the 3% public deficit to gross domestic product ratio imposed by the EU.
Five Star leader and deputy prime minister Luigi Di Maio (pictured) has said it could do no harm to go over the EU's 3% threshold.