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Monti warns of contagion if debt crisis not solved

 Italian Premier Mario Monti talks to the media during a press conference he held at the end of a meeting with Polish Prime Minister Donald Tusk, not ...
 Italian Premier Mario Monti talks to the media during a press conference he held at the end of a meeting with Polish Prime Minister Donald Tusk, not ...

Italy Soccer Match Fixing

Italian Premier Mario Monti talks to the media during a press conference he held at the end of a meeting with Polish Prime Minister Donald Tusk, not ...

Italy Soccer Match Fixing

Italian Premier Mario Monti talks to the media during a press conference he held at the end of a meeting with Polish Prime Minister Donald Tusk, not ...

Italian Prime Minister Mario Monti urged his European partners on Thursday to speed measures to limit contagion from the debt crisis crippling some countries and stimulate economic growth _ or risk a backlash from citizens paying the price for belt-tightening.
In a speech to an economic forum in Brussels, Monti said Italy was paying the price for the lack of quick action against contagion in the form of higher borrowing costs to service its public debt, which is 120 percent of gross domestic product.
While the interest rates on Italian debt eased after his government took office in November, borrowing costs have recently risen on fears that political uncertainty in Greece could cause the country to leave the eurozone and that Spain is struggling to contain its banking crisis in a recession.
The contagion, he said, `'is there because of the overall weakness of the system, more than for any specific weakness of the country."
He acknowledged Italy's high debt-to-GDP ratio as the result of `'the sins of the past" but said his government of technocrats has been working to bring it down.
The markets' failure to recognize the efforts could prove to be `'a powerful policy disincentive," he said in a video linkup from Rome.
`'I think Europe should accelerate its efforts in order to limit the contagion not simply because a huge financial contagion and crisis would be a frightful event, but even more because this would dismantle support for sustainable fiscal discipline," Monti said.
Monti cited proposals such as direct bank recapitalization, and he called in particular on Germany, as main force for fiscal stability, to take on a leadership role. Monti said he see direct links between limiting contagion and promoting growth.
Also on Thursday, Bank of Italy chief Ignazio Visco told an annual shareholders meeting that the country's economic contraction can be contained to 1.5 percent this year.
Visco said in the economy could show some signs of recovery toward the end of the year depending on the effectiveness of structural reforms, better use of public resources and greater European cohesion in attacking the financial crisis.
Visco underlined that unemployment in Italy has risen to 10 percent in March from 8 percent last July, while the rate among people aged under-25 rose to 36 percent from 28 percent.
The government expects the economy to contract by 1.2 percent this year.


Updated : 2021-10-29 00:36 GMT+08:00