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Pedestrians carry shopping bags past a store advertising a sale in its window display in Rome. (Bloomberg) |
Debt-laden Italy does not need rescue funds from the European Union but could use “a little quiet” on the markets, Finance Minister Vittorio Grilli said in an interview published Sunday.
“We think the instruments put in place by the Central European Bank, when they are operational, will substantially ease tensions on the spreads” between bond yields in Italy and Germany, he told the left-leaning daily La Repubblica.
“The only thing that would be useful is a little quiet on the markets ... normalised market conditions that would allow an orderly renewal of our bond issues,” he said.
The remarks came after reports that the government of Prime Minister Mario Monti had discussed asking EU rescue funds to intervene on bond markets to help lower Italy’s borrowing costs.
Using a newly agreed mechanism, bond purchases would take place when the difference with the borrowing cost of Germany, which pays the lowest rates to borrow money, rises above a certain level.
Italy’s 10-year borrowing cost has sometimes soared above six percent, a level considered unsustainable in the long term.
Grilli blamed two factors ― “distrust of the euro which is currently predominant, (and) an assessment of our ability to get our economy in order, which is secondary right now.”
He added: “There is no ‘Italy case,’ and if there were one, it has largely vanished in recent months thanks to the actions of this government.”
While declining to compare Italy’s budget situation with that of Spain, he said: “Italy is currently one of the most virtuous countries in the world and certainly in Europe.” (AFP)
In the coming months, Grilli ruled out new austerity measures by Monti’s technocrat government.
Such a move ”would only depress further an economy that is already in recession,“ he said. The government has also ruled out steps such as taxes on large inheritances, having already assured a stronger revenue flow through higher taxes on property and investment income.
In the face of Italy’s staggering debt of nearly 2.0 trillion euros ($2.5 trillion), or 123 percent of the gross domestic product, Grilli confirmed that he would unveil a plan to reduce the equivalent of one percentage point of GDP per year by selling off state-owned real estate.
Along with budget cuts aimed at reducing the debt by 3.0 percent per year, Italy will be able to lower the ratio of debt to GDP by 20 points in five years, he said. (AFP)
