Rome

Italy cannot relent on fiscal consolidation, says ECB

Shortfall would leave country exposed to 'adverse developments'

Italy cannot relent on fiscal consolidation, says ECB

(ANSA) - Rome, September 13 - Italy cannot afford to relent on its policies to put its financial house in order if it wants to be sure of pulling out of its debt crisis, the European Central Bank (ECB) warned on Thursday. Premier Mario Monti's emergency technocrat government approved an austerity package of tax hikes and cuts in December and it has followed up this year with more cuts in public expenditure following a spending review and the introduction of structural economic reforms. The ECB said in its monthly bulletin that a shortfall in Italy's bid for fiscal consolidation would "merely allow the debt ratio to be stabilised at current levels and provide an insufficient buffer against adverse macroeconomic developments". The bank added, however, that Italy was on track to get its national debt-to-GDP ratio below 100% if it maintains rigour in its public finances. "The baseline simulation indicates that, if Italy fully achieves the targets set out in its stability programme update, the government debt-to-GDP ratio is expected to peak at 123% of GDP in 2012, thereafter declining to below 100% by 2020," the bulletin said. photo: ECB President Mario Draghi

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