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Italy does not need EU aid

Monday, November 19 09:41:43

Prime Minister Mario Monti rejected suggestions on Saturday that Italy should seek aid from its euro zone partners to bind a new government to strict reform conditions after elections likely to be held in March. Monti's comments, in a panel discussion at Milan's Bocconi University, follow growing speculation that he might try to use an aid programme to guarantee that his broad economic agenda is continued once his term in office ends. He said he had nothing against mechanisms including the special euro zone bailout fund and the European Central Bank's bond-buying programme to help governments that have undertaken budget and economic reforms but he said he would like to see other countries resort to such assistance.

"I don't think Italy needs it, nor will need it," he said in answer to a question during the discussion. Italy's borrowing costs have come down sharply since the ECB announced its so-called "Outright Monetary Transactions" plan in September. The yield on its 10-year BTPs is now just under 5 percent, well below a high of over 7 percent when Monti came to office during the height of the financial crisis a year ago. Monti also defended his government's decision to stick to the goal of a balanced budget, in structural or growth-adjusted terms, by 2013, despite the strain the objective imposes on Italy's recession-hit economy.

He said the government had considered asking for more time to meet the objective but had decided not to. "I have not regretted not asking for it," he said, noting that a number of other euro zone countries had delayed budget deficit reduction targets and that Italy would not have seen its own interest rates fall if it had done the same. The discussion came on the same day the government issued a 17-page account of its year in office which emphasized the international credibility Italy gained after Monti took over from the scandal-plagued Silvio Berlusconi.

With the countdown to elections now on following President Giorgio Napolitano's indication on Friday of a possible date of March 10, attention has focused on what will come after. Opinion polls suggest that a centre-left government of some form is the most likely outcome, but the political parties have yet to choose their main candidates or even decide under what voting system the ballot will be held. Much attention has been focused on the possibility that Monti himself may return at the head of a broad-based reform coalition if the election fails to produce a clear winner. His government has been widely praised abroad and the former European commissioner has strong support among business leaders, but the painful tax hikes and spending cuts imposed by his government have also sparked anger among ordinary Italians.

On Saturday, students protested outside the university buildings where Monti was speaking and two policemen were injured by firecrackers. Monti, who said his record in office was neither as good as his many international admirers believed nor as bad as the critics among his fellow economists claimed, has said repeatedly that he would be available to serve if needed.

But he repeated that he had no plans to run in the election himself. "Noone has asked me for a commitment and I'm not committing myself today," he said. At a separate event in Rome, Luca Cordero di Montezemolo, the chairman of sportscar maker Ferrari, who leads a civil movement aimed at promoting reform, praised Monti but said that he did not expect him to take a political lead. "We are not asking the premier today to assume the leadership of this political movement because it would prejudice his work," he said ( C) Reuters