July 13 (Bloomberg) -- Italian lawmakers are set to approve most of a 40 billion-euro ($56 billion) austerity plan this week as politicians seek to calm financial markets after Italian bond yields hit record highs.
Finance Minister Giulio Tremonti said today that approval of the package by the Rome-based legislature will come on July 15. The upper house Senate will pass the measures tomorrow, with the Chamber of Deputies set to push them through in a confidence vote the next day.
Opposition parties vowed not to obstruct the legislation in Parliament, where Prime Minister Silvio Berlusconi’s government has a majority. “These are tough times for Italy and for the euro, so it’s right to put stability absolutely before any other consideration,” said Marina Sereni, a parliamentarian with the main opposition Democratic Party.
Europe’s debt crisis has entered a new phase as contagion threatens to spread to Italy and Spain, European Central Bank incoming President Mario Draghi said today in a speech in Rome. Italian bond yields soared to the highest since 1997 yesterday as European policy makers meeting in Brussels failed to agree on a second aid program for Greece.
The deficit plan is “an important step in strengthening the public accounts” that will help reduce the debt, Draghi said today. He also called on the government to explain details of additional measures for 2014 that will be needed to achieve the balanced budget.
Tremonti, speaking at the same banking forum in Rome where Draghi made his comments, said the government was considering a plan to sell state-owned assets “once the crisis passes.”
The premium investors demand to hold Italian 10-year bonds over German bunds fell 5 basis points today to 280, down from a euro-era of 348 reached during trading yesterday.
Fitch Ratings said Italy is on track to meet this year’s budget target of 3.9 percent of gross domestic product. Italy’s adherence to fiscal targets would be consistent with stabilizing Italy’s sovereign credit profit and rating at AA-, Fitch said today in a statement.
--Editors: James Hertling, Leon Mangasarian
To contact the reporter on this story: Jeffrey Donovan in Rome at firstname.lastname@example.org
To contact the editor responsible for this story: Craig Stirling at email@example.com