Italian Senate approves reform package to avoid bankruptcy
Italy’s upper house has approved approve a package of reforms aimed at reassuring financial markets over the country’s stability and fending off possible bankruptcy. The lower house is expected to adopt them on Saturday in a schedule that has been accelerated by turmoil on financial markets.
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Friday's vote was passed by 156 votes in favouoro, 12 against and one formal abstention. The opposition did not vote to show their objections to the move.
Jitters over Italy’s 1.9 trillion-euro public debt this week pushed up bond rates - the rate at which Italy can borrow money on international markets - to alarming levels of nearly 8 per cent.
Prime Minister Silvio Berlusconi says he will resign as soon as parliament gives final approval to the austerity measures which include a liberalization of local services, state asset sell-offs and new infrastructure projects.
Stockmarkets rose on Friday over the prospect that former EU commissioner Mario Monti will most likely replace Berlusconi as the head of a transition government.
Ahead of Friday’s vote, Klaus Regling, the head of the EU rescue fund, the EFSF, said the it could be used to help Italy if requested.
Regling said between 250-300 billion euros could be made available in loans, since some of the 400 billion euros in the fund has already been reserved for Ireland, Portugal and Greece.
On Thursday, EU economic affairs minister, Olli Rehn warned that Europe’s debt crisis was dragging the region towards a new recession in 2012.
An EU forecast said growth across the eurozone would collapse to 0 5 per cent, a steep fall from its previous prediction of 1.8 per cent.
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