ROME (Reuters) - Italian Prime Minister Mario Monti says the country should try to get through the financial crisis, which has sent its borrowing costs spiralling, without the help of bailouts from its European partners.
The euro zone’s third-largest economy is on the right track to meet targets to rein in the public deficit this year and next, Monti said on Friday, but he urged lawmakers to keep up the pace of reforms to ensure the country can solve its problems on its own.
Speaking to reporters after a cabinet meeting, Monti said it was important for a country’s dignity and self-confidence not to have to rely on outside help.
“I think it’s best if you can count on everyone’s collaboration but not to be among those who have to hold out their hand,” he said.
He said there was no need for his government to pass further austerity measures and denied reports he was planning to introduce a special wealth tax.
Monti has pressed European partners for an agreement that would enable European Union bailout funds to be used to limit sharp market swings without the need for a full-scale bailout.
But he says Rome has no current plans to seek help and has firmly ruled out the need for any broader Greek-style bailout.
Mounting concerns about whether Spain can avoid asking international lenders for a bailout helped push up Italian bond yields on Friday and sent the spread over their German counterparts to around 500 basis points.
Monti said that Italy’s high borrowing rates were disappointing considering the reforms his government had passed and said insufficient action at the European level and political uncertainty in Italy were keeping markets nervous.
Italy is set to hold general elections in spring next year in which Monti has ruled out running. Former Prime Minister Silvio Berlusconi added to the unclear picture this week by hinting at a comeback but holding back from saying he would run.
Ratings agency Moody’s cut Italy’s sovereign debt rating last week to two notches above junk. It praised Monti’s reform efforts but warned it could lower the country’s rating again if the next Italian government failed to continue along the same path. Rival agency Fitch affirmed its A- rating for Italy with a negative outlook on Thursday.
Monti said on Friday he was confident that Italian reforms approved so far, including a tough package of tax hikes, spending cuts and pension reform, as well as labour market reform and deregulation, would slowly start to bear fruit.
“It’s no surprise that for now we do not see positive effects on growth, they will come, it will just take a bit of time,” he said.
Finance Minister Vittorio Grilli has said the government will revise down its forecast for the economy to a contraction of less than 2 percent in 2012. It previously expected the economy to shrink by 1.2 percent this year.
Italians are grappling with rising unemployment and stagnant wage growth at the same time as tax hikes, a combination which has sent consumer morale to its lowest in at least 16 years and depressed domestic demand.
Monti said on Friday he was reassured by the lack of serious social tensions in Italy, helped by what he described as a responsible approach to the crisis by trade unions and other groups, and said he hoped that would continue.
“I hope that sense of responsibility, also in terms of the trade unions, can continue so as not to aggravate an already complex situation and so we can focus on the way out of the tunnel in which we find ourselves,” he said.
Reporting by Catherine Hornby and James Mackenzie; Editing by Susan Fenton