Italy ‘requests’ IMF checks

Monitoring team to verify implementation of austerity measures, tax cuts and structural reforms.

The International Monetary Fund is to send a quarterly mission to Italy to verify the implementation of its economic reforms.

José Manuel Barroso, the president of the European Commission, broke off from the summit of G20 leaders in Cannes, to say that Silvio Berlusconi, Italy’s prime minister, had requested the move.

However, some reports suggest that Italy was put under pressure to accept the IMF visits.

Barroso said that the Commission would also be sending a monitoring team to make sure that the package of austerity measures, tax cuts and structural reforms go through.

A Commission spokeswoman played down claims that Italy, which unlike Greece has not formally requested financial support from the European Union or IMF, was being subjected to the same surveillance.

‘Not a troika’

“This is not a troika,” she said, referring to the three-pronged Commission-IMF-European Central Bank monitoring team sent to Athens. “Italy requested this itself. It will be adapted to the Italian situation.”

She added that the monitoring would act as a “watchdog” to verify that Italy was implementing “reforms and fiscal consolidation measures”.

Berlusconi presented his planned austerity measures to leaders of eurozone countries at their summit in Brussels on 26-27 October but leaders at the G20 have being expressing discontent that there shows little proof that he can implement them fully.

Berlusconi’s government coalition on Wednesday (2 November) failed to agree on a government decree that would have implemented the urgent fiscal measures.

Increased borrowing costs

In a sign that the eurozone debt crisis is rapidly moving to Italy, the country’s cost of borrowing rose to its highest level since the introduction of the euro yesterday.

Barroso said that the IMF move would “reinforce credibility and confidence” in the Italian reforms and that all results would be made public.

Herman Van Rompuy, the president of the European Council, said: “This is not a diktat. Italy is in a totally different situation from Greece.”

Rome in turmoil

Berlusconi will return to an increasingly volatile political situation in Rome after the G20 talks.

Six parliamentary members of his centre-right Party of Freedom (PDL) party issued a letter on Thursday (3 November) warning Berlusconi that they would not support him unless he formed a national unity government to push through urgent reforms.

Another two members of the party defected to an opposition centrist party, raising worries that Berlusconi will not survive a parliamentary confidence vote which is planned next week on a 2010 budget report.

Gianfranco Fini, the speaker of the Italian parliament’s lower house, urged Berlusconi to form a unity government as quickly as possible.

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Giorgio Napolitano, Italy’s president, held talks with leaders of political parties on Thursday to assess whether an alternative majority was possible to reach a consensus on passing reforms as quickly as possible.