European Central Bank President Jean-Claude Trichet pressed Italy today to deliver on its promises to get its strained public finances in order, saying it was essential to restore fragile market confidence.
Speaking as Italian bonds have come under renewed pressure in recent days, Trichet repeated a warning that Prime Minister Silvio Berlusconi's centre-right government had to meet last month's pledge of a clear plan to balance the budget by 2013.
"This is absolutely decisive to consolidate and reinforce the quality and the credibility of the Italian strategy and its creditworthiness," he told a conference in the northern Italian town of Cernobbio.
The European Central Bank, which has been buying Italian bonds in the market to try to hold down yields and stop borrowing costs for the euro zone's third largest economy spiralling out of control, has been stepping up its warnings that Rome must act quickly.
Wrangling over a €45.5bn package of austerity measures now going through parliament has caused growing alarm throughout Europe as a succession of tax and pension measures have been proposed and abandoned, sometimes within days.
Adding his voice to calls for action, Italian President Giorgio Napolitano said successive governments had failed to prevent a mountainous public debt from getting out of control and swift action was essential.
"We have hesitated from resolutely and coherently addressing constraints that should have been loosened and broken from the heavy weight of accumulated public debt," he told the Cernobbio conference.
Underlining the growing urgency of the situation, the premium investors demand to hold Italian debt rather than benchmark German bonds rose on Friday to 331 basis points, the highest since the ECB started buying Italian bonds in August. REUTERS