ROME (MNI) – Structural and fiscal reforms planned by Italy’s new
government are a “step in the right direction” and more reforms are
expected in the future, EU Economics and Monetary Affairs Commissioner
Olli Rehn said on Friday.
“This package of reforms is a positive step in the right direction,
but I expect that more will follow in due course,” Rehn said.
Praising the efforts of Prime Minister Mario Monti, Rehn said that
“decisions recently taken and currently in the pipeline definitely
reinforce the stability culture in Italy.”
Italy has the assets it needs to overcome the crisis, he said.
Commenting in general terms, Rehn said that fiscal consolidation
should focus more on expenditure cuts than revenue increases. said.
Eurozone finance ministers meeting in Brussels next Tuesday will
discuss a report prepared by the Commission on Italy’s progress with
reforms, he said.
At a summit in October, Italy agreed to submit itself to
inspections from the EU and IMF in a bid to lend greater credibility to
its reform efforts.
Italy’s rising borrowing costs, a reflection of investors’ fears
about the ability of the Eurozone’s third largest economy to repay its
huge debts, have brought the crisis of confidence in sovereign bonds to
the heart of the Eurozone.
Stronger firewalls to restore market confidence, such as a
leveraged Eurozone bailout fund, are essential, Rehn said.
“The contagion effect has been touching the proximity of the core
and even the core itself, which shows that the crisis is now in a
systemic phase. We need stronger firewalls to contain this contagion,”
he said.
— Brussels bureau: +32495228374; pkoh@marketnews.com
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