(BSS/AFP) - Fitch Ratings raised Italy`s outlook from stable to positive on Friday, nodding to stronger fiscal performance recently and commitment to European Union fiscal rules.

Those factors point to a possible reduction in risks coming from the country`s exceptionally high debt levels, the agency said.

In the same report, Fitch affirmed Italy`s credit rating at "BBB."

The verdict came days after Italian lawmakers adopted a draft 2025 budget financed partially by a new tax on insurance companies and a temporary freeze on tax credits for banks.

The budget also includes tax cuts for low-income families -- a key issue for far-right Prime Minister Giorgia Meloni.

As in last year`s budget, ministers sought to balance electoral promises with the need to reduce deficits and avoid adding to Italy`s mounting debt.

Targeted by the European Union for its "excessive" deficits, Italy is under pressure to balance its books and reduce a debt close to three trillion euros.

On Friday, Fitch noted that Italy`s positive outlook "is reinforced by signs of stronger potential growth and a more stable political context."

"In our view, Italy`s fiscal credibility has increased, and the 2025 budget underscores the government`s commitment to EU fiscal rules," Fitch added.

It expects the country`s fiscal deficits to narrow to 3.2 percent of GDP next year, and to 2.7 percent in 2026.