Italy's budget deficit amounted to 2.3 per cent of gross domestic product in 2017 and the public debt stood at 131.8 per cent, national statistics bureau ISTAT reported on Wednesday, revising up its previous estimates.

On March 1, ISTAT had reported a deficit-to-GDP ratio of 1.9 per cent and a debt-GDP ratio of 131.5 per cent, both down from the previous year when the deficit stood at 2.5 per cent and the debt at 132.0 per cent.

ISTAT warned at the time that its data was subject to upward revisions because it did not include public money used to bail out two local banks in the northern Veneto region and save the Tuscan lender Monte dei Paschi di Siena.

Incorporating recommendations from European statistics agency Eurostat, ISTAT on Wednesday revised up the 2017 deficit by €6.5 billion and revised up the debt by €7 billion.

The outgoing government of Prime Minister Paolo Gentiloni has targeted the deficit to decline this year to 1.6 per cent of GDP, but it remains to be seen if this goal will be maintained.

At parliamentary elections on March 4 the anti-establishment 5-Star Movement and the far-right League performed strongly on platforms of tax cuts and more welfare spending, and both said they would increase the budget deficit if necessary.

Formal consultations to form a ruling coalition began on Wednesday after the election produced a hung parliament, and one or both of these parties are likely to have a strong role in government.

ISTAT also reported on Wednesday that in the last quarter of 2017 the budget deficit declined to 1.6 per cent of GDP, compared with 1.9 per cent in the same period of 2016.