Monti: Talk of deeper cuts 'premature'

Updated: 2011-11-16 08:05

(China Daily)

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ROME - Italy's Premier-designate Mario Monti says it is "premature" to say if the country will require more tough measures to rescue its finances and revive its economy, as he sought enough backing from political parties to form a government.

Two days after Silvio Berlusconi resigned as premier, and with investors still nervous about Italy's credibility, Monti spent Monday consulting with political parties, then said he can't say when he would have a cabinet lined up.

Pressured by financial markets, Italy's Parliament last week gave final approval after weeks of political squabbling over emergency measures aimed at cutting spending and spurring economic growth, but it is unclear if that action is enough with Italy's debt costs shooting upward.

Asked if Italy would need a "corrective" package of measures, Monti replied: "I appreciate the question, but it would be premature on my part to reply."

A few party leaders - including ones in Berlusconi's party - have been demanding the nonpartisan Monti only last long enough to implement economic reforms, then step down so elections can be called this spring, a year ahead of schedule.

But Monti, a 68-year-old economics professor, made clear that he intends to serve until spring 2013 elections, calling it counterproductive to say when he'd step down.

"If a date before (2013) is set, this haste would take away credibility from the government's actions," Monti said at his brief news conference. "I won't accept" such a condition, he said.

Investors initially cheered Monti's appointment, though concern lingered about the sheer amount of work his new government will have to do to restore faith in the country's battered economy and finances.

Italy's government raised $4.1 billion in a sale of five-year bonds on Monday, but the 6.29 percent interest rate was the highest since 1997. Italy paid a much lower rate of 5.32 percent at a similar auction last month. The increase is a sign that banks and other bond buyers remain concerned about Italy's ability to pay its debts.

Italy will need those borrowing rates to come down in the coming months to avoid a big increase in its interest costs - some 200 billion euros ($273 billion) in public debt comes due through the end of April.

Tuesday is shaping up as a crucial day for Monti to decide if he can count on Parliament's support. He was expected on Tuesday to meet Italy's two largest parties in the legislature - those of Berlusconi's conservatives and a center-left party made up of former communists and ex-Christian Democrats. Their votes would be crucial in a confidence vote, likely to come later this week, which would seal the start of Monti's government.

In an indication of just how deeply split the ranks of Berlusconi's conservatives are, one of its most prominent leaders, Foreign Minister Franco Frattini, used a state TV interview to urge his party to rally behind Monti "with conviction and force" because "we can't run the risk that this government won't succeed".

Besides the clamor from some parties for elections soon, some have been insisting that political figures are given roles in his cabinet. That could undo the "technocratic" character many analysts expected he would bring to his government.

Monti told reporters he would take the time needed to line up a strong team, and said he hopes the markets will "temper their impatience" by his need to choose well.

Associated Press

(China Daily 11/16/2011 page11)