Letta sees early signs of economic recovery

Italy's economy cannot afford a political crisis, says Letta

Letta sees early signs of economic recovery

Bolzano, August 5 - Italy's nascent economic recovery must not be derailed by a political crisis, Prime Minister Enrico Letta warned Monday. "We cannot afford a political crisis," Letta said, hours after meeting with the head of the Bank of Italy as well as his finance minister. That means Italy must move quickly on election law reforms, to head off future political instability, added Letta. He called for "urgent" reforms to Italian election laws this fall. "We must give a signal that we want to overcome the causes of instability". Letta's fragile coalition government also faces threats from ex-premier Silvio Berlusconi's People of Freedom (PdL) party, which was outraged by last week's court decision upholding Berlusconi's conviction on tax fraud. Some have threatened to pull out of the coalition government in protest, triggering new elections. Earlier in the day Ignazio Visco, governor of the central bank, told Letta and Finance Minister Fabrizio Saccomanni that he sees further signs that Italy's economy may finally be improving. A Bank of Italy source said Visco reported that although signs of recovery are appearing, these are coming slowly and need reinforcement. Italian banks are solid, but distressed areas in the Italian financial system persist, causing the Bank of Italy to pay particular attention to capital ratios within banks, the source added.

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