Finance Minister Tonio Fenech yesterday said he was not very concerned about the state of Italy’s economy and finances, echoing the general mood among his eurozone colleagues.
“Much of what is being said is just speculation by the international media. So far there doesn’t seem to be a risk that Italy will go down the same path of Greece, Ireland or Portugal,” he told The Times.
Although Italy’s debt was high, it was different from that of other states that needed a bailout since much of its debt was home-grown and not raised on the international financial markets, he said.
Mr Fenech’s comments came at the end of two days of intense meetings of EU Finance Ministers in Brussels, which discussed the ongoing crisis in the eurozone, especially Italy’s perceived trouble.
The speculation was stirred after last Friday’s giornata nera (black day) when Italian bond rates hit record highs and the Milan Stock Exchange fell sharply.
The international markets are concerned about the possible spread of the financial crisis to Italy because such an eventuality would hit the euro.
Though Italy is the eurozone’s third largest economy, many economists interviewed by the international media said the country’s strengths would prevent any Greek-type scenario.
To send a strong message and calm the markets, the Italian government is currently piloting a €40 billion austerity plan through Parliament.
The country’s debt has reached 120 per cent of GDP in a period of low growth (0.1 per cent in the first quarter of the year). However, doubts remain about the plan’s actual implementation, which is intended to enable Italy to achieve close to a balanced budget in 2014.
Most of the measures are for 2013 and 2014 and would therefore come under the responsibility of a new government because the current government’s term of office ends in the spring of 2013.
Still, the 17 members of the eurozone yesterday said they were confident Italy would not need a bailout.
The chairman of the Economic and Financial Affairs Council, Polish Finance Minister Jacek Rostowski, said he did not believe there was any danger because “Italy’s budget situation seems to be well controlled”, a view shared by Dutch Finance Minister Jan Kees De Jaeger. German Finance Minister Wolfgang Schauble said Italy “is not a problem”.
Touching on another matter, Mr Fenech said he had no problem to accede to a call by the Labour opposition for a parliamentary debate on the current situation in the eurozone. “I am all for this debate and will be coordinating with the opposition on how best to hold it.”
Mr Fenech yesterday also signed on Malta’s behalf the treaty establishing the European Stability Mechanism, a €700 billion bailout fund to help those eurozone member states that find themselves in difficulty.
Malta will be paying €58.4 million into the fund’s share capital over a period of five years starting from July 2013.