Rome will not be forced to seek help from the European Central Bank’s emergency scheme, according to the Governor of the Bank of Italy in a strong rebuffle of economists’ claims that the country faced another crisis on the bondmarkets.
Ignazio Visco insisted that Italy was in a more stable economic position that a year ago when bond yields were pushed into the danger level of more than 7pc. “Now the situation is characterized by lower tension,” he told reporters at the weekend.
The central banker said the ECB’s Outright Monetary Transactions programme was “created to face really acute situations in which borrowing costs are pushed well above what is justified by a country’s economic fundamentals.”
Italy, whose borrowing costs jumped last week in the latest spasm of the debt crisis, was not in a situation that warranted OMT (CDNX: OMT.V - news) activation, Mr Visco said. However, he agreed that political and economic uncertainty is a burden” and said that “the fruits of austerity must not be wasted.” If Italy continues with its reform programme, “there is a higher than 50 per cent probability that the turnaround will come in the third or fourth quarter of 2013,” he said.
Separately, Cyprus has called on state-backed companies, including telecoms and electricity firms, to stump up around €200m in three-month loans to the government. The government’s spokesman, Stefanos Stefanou, told reporters: “We are at a very critical stage and it is everyone’s responsibility to help overcome these difficulties so we can move forward.”
He added: “The state needs that money now to be able to cover its financing needs in December where its obligations are very high due to the payroll and other end of year costs.”
Meanwhile pressure mounted on Francois Hollande’s socialist government as the French actor Gerard Depardieu said he was giving up his passport because of the President’s punitive tax rates.
In an angry open letter to French prime minister Jean-Marc Ayrault, Mr Depardieu, star of Green Card (Other OTC: GRNA.PK - news) and Obleix the Gaul, saying he was moving to Belgium because “you consider that success, creativity and talent... must be sanctioned.”