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The controversial budget sparked fury in Brussels. The President of the European Commission, Jean-Claude Juncker, has even warned Italy that they would trigger a Greek-style depression.
The EU, the European Central Bank and the International Monetary Fund have lent Greece a total of 259 billion pounds sterling (289 billion euros) under three successive bailout programs in 2010, 2012 and 2015.
In what has been the biggest rescue of the global financial history, Athens has completed this summer only the completion of the emergency loan program.
Mr Juncker said this week: "Italy is distancing itself from the budgetary targets we have jointly agreed at EU level.
"I would not wish that, after having been really able to cope with the Greek crisis, we found ourselves in the same crisis in Italy, and this crisis was enough.
"If Italy wants additional special treatment, it would mean the end of the euro, so you have to be very strict."
Angelo Ciavarella, Head of Global Markets at INFINOX Capital Ltd, suggested that Mr Juncker's comments are overwhelmed, as the state of the two economies is too different to be compared.
He told Express.co.uk, "I would not go that far. I would say that these are two different situations.
"Italy is a much bigger economy, the third largest economy in the eurozone, so its departure would really endanger the entire EU project."
But he added, "I do not think we're getting there, at least not in the short term."
The Italian government subsequently retracted its budget by announcing a somewhat diluted proposal by reducing the deficit targets beyond 2020.
Prime Minister Giuseppe Conte acted Wednesday to appease investors and creditors of the EU, saying the country was embarking on a deficit of 2.1% in 2020 and 1.8% in 2021.
Mr. Ciavarella was not surprised by the turnaround that took place despite Italian Deputy Prime Minister Luigi Di Maio, of the Five Star Movement, who had previously refused to "go back one millimeter "on the budget proposals.
Ciavarella said: "They are trying to answer some of the possible demands of the EU that they will meet.
"Italy is a dog that barks but does not really bite because they need money and they know it.
"They do not really want to have a confrontational attitude with Europe.
"I am confident that they will find a compromise with the EU."
Rome is to submit its draft budget to the European Commission for examination by 15 October at the latest. The European Commission will then make a decision.
Spokesperson Natasha Bertaud said: "The position of the Commission remains unchanged.
"We will evaluate the draft budget plan for 2019 after its official presentation."
The euro zone sets global targets of 3% annual deficit and commits countries to reduce the overall debt to 60%.
Italy's debt is already the second highest in the euro area as a percentage of economic output after Greece, with around 131% of GDP.
The Italian Minister of Economy, Giovanni Tria, was forced to defend the budget deficit over the weekend by promising that the level of debt will be under control.
He suggested that this would be possible by seeing growth in Italy through investments over the next two years.
