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06 September 2011

WSJ: Italian minister gives austerity assurance


Italy's industry minister, Paolo Romani, has dismissed calls for Italy to speed up its timetable for passing budget-tightening measures, rebutting criticism that the Italian government's austerity package isn't tough enough to dig the country out of the eurozone debt crisis.

Mr Romani said the government was sticking to its plans to push the measures through Parliament by September 15. The government will also wait until after Parliament passes the austerity package to address demands for growth-boosting measures that investors and the European Central Bank consider a priority for reviving Italy's stagnant economy. "I don't understand this worry about the timing of the measures", Mr Romani said, adding that the government worked over the weekend to push the measures through parliamentary committees, so that voting can begin after Wednesday. "We're talking about hours, days", he said.

When asked for a comment on skyrocketing credit-default swaps, Mr Romani said that "if on Monday they will go back to an above [four percentage points] level, we would speed up the approval of the austerity plan. The government can't do much more." Early Monday, the five-year sovereign CDS of Spain and Italy widened, with Italy reaching 4.22 percentage points. Société Générale economists on Monday said they expect Italy to be downgraded by rating agencies for budgetary and macro-economic outlooks, uncertainties about the country's ability to access market funding, and its high rating relative to peers, especially for Moody's. "So downgrades of Italy by all three agencies look probable, given recent developments", Société Générale said.

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© Wall Street Journal


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