Mario Monti says debt-crisis danger for Italy has receded
September 6, 2012, 12:14 am TWN
MILAN--The risk that Italy may suffer the same fate as debt-crisis hit Greece has receded and economic recovery in the eurozone's third largest economy is in reach, Italian Prime Mario Monti said Wednesday.
“Remember how things were a year ago ... we didn't know it well, but we risked ending up in a financial crisis like that” which has struck Greece, Monti told local television Norba 24 during a visit to the Puglia region.
“This year, the prospect is decidedly further off. We are among the countries which decide in Europe how to resolve the Greek problem. We have been re-inserted in the circuit of decisions, we are respected,” he said.
Monti was also optimistic about the economic growth prospects for Italy, which slid into a recession at the end of last year.
“We aren't seeing recovery in the figures ... but it is in reach and I believe that it will arrive soon,” he added.
Monti has been battling to drive down Italy's vast debt with austerity packages and tax hikes, as well as spur future growth with a raft of reforms.
In terms of the difference in borrowing costs, known as a spread, between struggling countries such as Italy and those of Germany, Monti said they not only damaged those countries involved but also monetary policy in the eurozone.
The day before a key European Central Bank meeting at which the central bank may announce a new round of bond purchases to ease borrowing costs, Monti said it was very important the EBC act within its mandate “in the interests of Germany as well as Italy and France.”
The country's usually reserved president Giorgio Napolitano said Wednesday that Italy's current spread levels were “inexplicable,” adding that they were “a problem not just for Italy, but also for the euro.”
A study by the Bank of Italy published this week found that Italy's correct spread for 10-year bonds should be around 200 basis points, while it currently stands at around 400 basis points.
Monti has complained that Italy is being forced to pay elevated interest rates on it debt due to investor unease over the country's economic instability which he says fails to recognize the government's crisis-busting policies.