Italy PM says to meet budget goal, not seeking IMF aid

BRUSSELS (Reuters) - Prime Minister Mario Monti pledged measures on Wednesday to ensure that Italy meets its goal of balancing the budget even if economic prospects worsen, and said no approach for help had been made to the International Monetary Fund.

Monti, attending his first meeting of European finance ministers since taking office, said he had outlined measures that he will present to the cabinet on Monday to bring public finances under control and had received a "very positive" response from partners.

"I confirmed the objective of a balanced budget in 2013," he told a news conference.

He said the programme, combining measures pledged by former Prime Minister Silvio Berlusconi's centre-right government and further structural reforms, would ensure the goal was reached "even in the face of a possible deterioration in the economic cycle which may be greater than expected."

Italy, one of the world's slowest growing economies over the past decade, faces the prospect of recession next year with the Organisation for Economic Cooperation and Development forecasting that the economy will contract by 0.5 percent.

Monti is expected to announce measures including an increase in pension ages, a revamped housing tax and a wealth tax on private assets as he seeks to restore shattered market confidence in Italy's public finances.

"If Italy misses this challenge, or does less than what is expected of it, the consequences would be very serious for everybody," Monti said.

Italy, the euro zone's third largest economy, has been at the centre of the debt crisis, with yields on its 10 year bonds at over 7 percent, around the levels seen when countries like Greece and Ireland were forced to seek a bailout.

Monti said he had met the European representative from the International Monetary Fund on Wednesday but he denied that Italy was on the point of requesting aid from the Fund.

"This has not been considered," he said but noted that there had been some progress on integrating the role of the European Central Bank, the euro zone's own bailout fund, known as the European Financial Stability Fund and the IMF.

"On the role of the EFSF, the ECB and IMF, there have been steps forward," Monti told a news conference after a meeting of European finance ministers.

"I don't really feel there is absolute clarity in every respect on this important group of European financial institutions which Europe can and should deploy better and more consistently, and do so very quickly, so that they can contribute to a solution of its problems."

However he said the meeting had not discussed changing the role of the ECB so that it became a lender of last resort, as many in Italy have been urging.

(Writing By James Mackenzie; editing by Ron Askew)