Tuesday

24th Jan 2017

Report: Italy to be put under IMF surveillance

  • Berlusconi will face his 53rd vote of confidence in parliament next week (Photo: The Council of the European Union)

Reuters reports that Italy has agreed to be put under surveillance by the International Monetary Fund (IMF) as part of a plan to restore market trust in the eurozone's third-largest economy.

After late-night talks with G20 leaders in Cannes, Berlusconi agreed to have the IMF check up every three months the way pension and labour market reforms are implemented and privatisations are carried out, EU sources told the financial newswire.

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"We need to make sure there is credibility with Italy's targets – that it is going to meet them. We decided to have the IMF involved on the monitoring, using their own methodology, and the Italians say they can live with that," one EU contact was quoted as saying.

Le Monde also reported that "Italy, the third-largest economy of the eurozone, is going to be put under IMF surveillance", according to the paper's correspondent in Cannes.

The official line from Rome is to deny the reports. But Italian newswire Ansa quotes unnamed officials saying they are "ready to ask for advice from the IMF about the implementation of measures agreed by the euro-group."

The yield on Italian bonds on Thursday rose to a euro-era record of 6.4 percent. It was on its way down to 6.1 percent on Friday (4 November) morning.

According to Italian media, a €44 billion credit line is on the table from the IMF to help Italy lower its borrowing costs, but so far officials in Rome are rejecting the offer.

If Italy goes for the IMF lifeline, it would cast doubt over the viability of the EU's own bail-out fund, the European Financial Stability Facility, whose firepower was agreed to be boosted to €1 trillion precisely in order to help Italy and other large euro-economies to finance their debt.

Squeezed by markets and world leaders and facing erosion of support back home, Berlusconi will next week undergo his 53rd vote of confidence.

"On Monday there will be a disaster on the markets if you, Silvio, stay at your post and do not go ... Because the problem for Europe and the markets, correct or not as it may be, is in fact you," Giulio Tremonti, Italy's finance minister said on Wednesday night.

Six MPs from Berlusconi's People of Freedom party on Thursday also wrote a letter to the prime minister, demanding "a new phase in politics and a new government." Two more coalition MPs defected on Thursday and more are expected to follow - according to Italian daily La Repubblica, the government has already lost its majority in parliament.

Giorgio Napolitano, the country’s president, for his part has been meeting with opposition leaders "who have expressed their availability to take their responsibility."

EU should raise own taxes, says report

A group chaired by former Italian PM and EU commissioner Mario Monti says Brexit should be used to create EU-level levies to depend less on member states contributions, and to abolish member states rebates in the EU budget.

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