Itay's Tremonti says no need for new budget measures

Trade the News

Sunday September 05, 2010 09:25:10 AM GMT

* Tremonti repeats no need for extra budget measures

* Says tax revenues, bond sales "not bad"

* May be problems for some EU countries but not Italy

By Francesca Landini

CERNOBBIO, Italy, Sept 4 (Reuters) - Italy's budget situation is stable and the government will not need to pass additional budgetary measures before the end of the year, Economy Minister Giulio Tremonti said on Saturday.

"Italian fiscal revenues are not bad, Italian government bond auctions are not going badly," he told reporters on the sidelines of a conference in Cernobbio, on the shores of Lake Como outside Milan.

"There is no need for any additional fiscal measures in the autumn," he said, repeating a line he has maintained since piloting a 25 billion euro ($33.54 billion) austerity package through parliament in July.

Italy has struggled with a public debt burden equivalent to almost 120 percent of gross domestic product, twice European Union limits, but has made efforts to control its public deficit that have been generally welcomed by financial markets.

Tremonti's austerity measures, combining spending cuts, a crackdown on tax evasion and a pay freeze for many public sector workers are intended to bring the deficit down from 5 percent of GDP this year to 2.7 percent by 2012.

In an interview with the La Repubblica daily published on Saturday, he said any suggestion that the government would have to pass any extra austerity measures to supplement the package passed in July was "far-fetched".

He said the regular public finance bill to be presented in parliament this autumn would be simply "tabular", outlining the figures underlying the government's budget. "And so it will be very different from the old public finance bills," he said.

In Cernobbio, he said Italy's economy was solid, despite uncertainty about the world situation.

"We are still crossing on unknown territory and I believe there will be more problems for some European states during the autumn but I do not see any problem for Italy, although we have to be prudent and realistic," he said.

Financial markets have generally seen Tremonti as a guarantor of financial stability, giving him a pivotal role in the government of Prime Minister Silvio Berlusconi, which has been beset by political divisions.

Berlusconi's feud with his former ally on the centre-right, Gianfranco Fini, speaker of the lower house of parliament, has opened the prospect of early elections as Fini commands the backing of enough deputies to deprive the government of its parliamentary majority.

But Tremonti, sometimes seen as a potential alternative leader of the centre-right if Berlusconi were forced to quit, said the government was not about to fall.

"Berlusconi's government is here to stay," he said. (Writing by James Mackenzie, editing by Mike Peacock)

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