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Berlusconi rejects debt crisis despite market upheaval

'We have solid economic fundamentals', PM says

03 August, 19:27
Berlusconi rejects debt crisis despite market upheaval (ANSA) - Rome, August 3 - Premier Silvio Berlusconi on Wednesday rejected suggestions that Italy was facing a debt crisis and said a lack of confidence in the country's economy was totally unjustified.

Addressing parliament, he said the country's economy was "strong" and knew how to be "cohesive" in hard times.

"No-one is denying the crisis, everyone has to work to overcome it," he said. "You are listening to a businessman who has three companies on the stock exchange and who is in the financial trenches aware every day of what is happening in the markets".

His comments came after recent losses on the Milan stock market and a dramatic rise in Italian bond yields.

Speaking first to the House after the markets had closed, Berlusconi recalled how last month the government had pushed through an austerity budget plan to cut spending and place Italy on track to balance its budget by 2014.

He said this plan had won the approval from the European Union but failed to convince a market where uncertainty reigned due to problems which had little to do with Italy, like the debt crisis in Greece, and weak recovery in the United States and Japan as well as some emerging economies.

According to the premier, markets have ignored the strength of the Italian economy and, in particular, its banking sector which have passed EU stress tests, and the importance of household wealth for the economy.

"We have solid economic fundamentals, our banks have liquidity and are solvent," he said.

The debts accumulated by the business sector were fully sustainable by their turnover, he added.

Recognising the crisis, Berlusconi said it was necessary to take further measures to ensure confidence and stability in the economy. Stability, he observed, was the best defence against speculation.

What is needed now, the premier said, was to adopt an immediate action plan to boost growth, make further cuts to the deficit and reduce the state's borrowing rate. This should include cutting the cost of government as well as reduceing the state's weight in the economy, and rationalising its activities through mergers and liquidations.

Berlusconi said it was most important for political, business and labor forces to all work together towards the common goal of stability and growth. This did not mean that the opposition had to share the government's plans, but that it should make its contribution to a solution, he said.

The government, the premier said, was ready to do its part.

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