FILE PHOTO: Italian Prime Minister Giuseppe Conte meets with European Commission President Jean-Claude Juncker to discuss the dispute between the EU and Rome over Italy's profligate policies in its 2019 draft budget, in Brussels, Belgium November 24, 2018. REUTERS/Piroschka van de Wouw/File Photo

BUENOS AIRES (Reuters) - The President of the European Commission Jean-Claude Juncker said on Friday the EU executive was making progress in talks with Italy over the country’s budget.

The Commission said last week Italy’s excessively expansionary 2019 budget was in breach of EU fiscal rules and would not decrease the country’s large debt as required.

This set the stage for a possible disciplinary procedure that could lead to fines and would leave Italy in the market spotlight for a prolonged period. But over the last days Rome has sent signals it could tweak its budgetary plans.

“We are not at war with Italy,” Juncker told a news conference at a meeting of leaders of the world’s 20 largest economies (G20) in Buenos Aires.

“The atmosphere is good. We are making progress,” he said, adding that he would have a meeting with Italy’s Prime Minister Giuseppe Conte later on Friday or on Saturday.

“I want Italy to be the Italy, Italy always was inspiring Europe, not turning its back to Europe,” Juncker said, urging not to “dramatise” the current dispute with Rome over its budget.