Italy is focused on meeting its own commitments after Spain became the fourth euro-area nation to seek a bailout with a 100 billion-euro ($124 billion) lifeline for banks, Deputy Finance Minister Vittorio Grilli said.
“The situation in Europe is a complicated” one, Grilli said in an interview at an event in Rome late yesterday. “We, as Italy, are focusing on our own agenda and the good things that we are doing. We have to keep focused on our own commitments.”
Spanish borrowing costs rose to the highest in the history of the euro yesterday, and the yield on Italian 10-year securities jumped to the highest since January before debt sales by today and tomorrow. Italy, bearer of the region’s second- biggest debt load after Greece, is unlikely to need a bailout as its economy is in a better state than Spain’s, Fitch Ratings Managing Director Ed Parker said in Oslo yesterday.
European governments “are working” to prevent the region’s debt crisis from spreading further, Grilli said, adding that “very important decisions have been taken.”
Grilli also rebuffed concern that investors might see Italy as the next country in the firing line, saying that it’s only “speculation.” Austrian Finance Minister Maria Fekter said yesterday she sees no indication that Italy would request a European Union bailout, one day after saying the country was at risk of needing a rescue.
“As I consider inappropriate the comments by the minister on the situation of another member state, I abstain from commenting on such remarks,” Italy’s Prime Minister Mario Monti told reporters earlier in Rome yesterday, when asked to comment on Fekter’s words.
Monti’s government raised taxes on property, gasoline and luxury items such as yachts as part of a 20 billion-euro austerity package passed in December. The plan was aimed at balancing the budget in 2013, a target that was postponed by one year in April as the economy sank deeper into its fourth recession since 2001.
Still, Italy is on track to bring its budget deficit within the European Union limit of 3 percent of gross domestic product this year and the country is already running a surplus before interest payments, meaning its debt will soon peak at about 120 percent of GDP. The budget deficit was 3.9 percent of GDP last year, less than half that of Spain.
The Rome-based Treasury auctions up to 6.5 billion euros of 364-day bills today. A further test comes tomorrow when Italy seeks to sell as much as 4.5 billion euros of longer-maturity debt.
The fallout from Monti’s austerity measures, coupled with a forecast of a recession in the single-currency region, will lead the Italian economy to contract around 1.5 percent this year, Bank of Italy Governor Ignazio Visco said May 31.
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