Brussels, 08/11/2011 (Agence Europe) - A group of European Commission experts is due to arrive in Italy on Wednesday to make a detailed assessment of implementation of the recently announced budget cuts and structural reforms in Italy, as the Italian government lost its majority in parliament on Tuesday for the first time. EU Economic and Monetary Affairs Commissioner Olli Rehn said on Monday evening 8 November, as he left the Eurogroup meeting that the Commission's experts would be starting their investigations on Wednesday and as far as they were concerned, the earlier, the better, irrespective of which government is in power in the future. He said the economic and financial situation in the country was of great concern, and asked the Italian government to respond by the end of the week to a questionnaire sent by his department, asking for details of exactly how the country plans to meet its economic and budgetary commitments, following the decision of the last eurozone summit to arrange intensified monitoring of the country (see EUROPE 10483).
The Eurogroup expects the Italian government to implement all the measures that have been adopted, including changes to labour law and the pensions system. Unlike Greece (see separate article), the eurozone finance ministers are not calling for political unity in Italy over the country's promises to Europe because, as the chair of the Eurogroup, Jean-Claude Juncker, explained, Italy is not in receipt of a rescue package.
In addition to the Commission experts, the International Monetary Fund will be sending its own team of inspectors to Italy every three months to monitor the country's austerity programme. The decision to send in the IMF experts was taken amidst serious pressure on Europe from its global partners at the G20 summit in Cannes (see EUROPE 10489) to boost eurozone credibility by acting as a straitjacket for the embattled Italian prime minister Silvio Berlusconi. Doubts about political leadership in Italy have led to a hike in Italian bond yields (increasing the cost of borrowing).
Rome has given itself the target of balancing its books by 2013 and bringing Italy's gross public debt down to 113% of GDP the following year. In the summer of 2012, a “Golden Rule” will be added to the Italian constitution to restrict government borrowing. Italy is planning to continue to sell off state assets and change labour law by the end of this year to make it easier to hire and fire. It will also change the unemployment benefit system. The retirement age will increase to 67 by 2026. On Monday, the Austrian finance minister Maria Fekter said Italy knows that it is too big to expect foreign aid and therefore draconian efforts will be required by the country itself. The EFSF bailout fund does not have enough money at the moment to bail out Italy, whose debt stands at €1.9 trillion. (MB/transl.fl)