Letta says Italy can grow without debt

But premier warns it won't be easy

Letta says Italy can grow without debt

Rome, May 6 - Premier Enrico Letta said Monday that it is possible for Italy to pursue policies that will help it return to growth without increasing the country's massive public debt, but he warned it will not be easy. Letta, who was sworn in at the helm of a left-right coalition government eight days ago, faces big headaches in trying to finance pledges to cut labour taxes and measures to boost growth and cut unemployment without reneging on Italy's commitment to the European Union to cut its public deficit. He also has to find money to cover a promise to suspend the June rate of IMU property tax, to refinance the budget for unemployment benefits as applications sour with the recession biting hard and to try to avert a 1% rise on the top band of value added tax scheduled for July. "It is possible to grow without getting into debt, other European countries have proven it," Letta said. "We, on the other hand, are proof that getting into debt does not mean promoting growth. We've created lots of debt in recent years, without growing. "I never said it would be easy. On the contrary, I'm very well aware that it's difficult. But this is the aim". Letta went on a tour of European leaders last week in which he urged them to make promoting growth as important for the EU as encouraging fiscal consolidation. He said the EU was in "a crisis of legitimacy, when citizens need it most" and that it had to become "an engine for sustainable growth". He also said he intends to propose measures to promote growth at a summit of European leaders in June.

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