Italian Premier Mario Monti has submitted to the Parliament a new austerity program focusing on reducing public debt. Monti’s new unity government is expected to breathe new life into Italy’s economy and steer the Eurozone's third-largest economy through its debt crisis.  Former EU commissioner Mario Monti was appointed Italian Premier following Silvio Berlusconi’s resignation. The 68-year-old economist had 10 years of experience as an EU commissioner in charge of internal market and competition policy. After the swearing-in ceremony, the Premier announced a 16-member
technocratic cabinet, giving himself the position of Minister of Economics and Finance. Mr. Monti said the absence of politicians in the cabinet will not affect the government, but will enhance its power by avoiding political controversy. The Premier expressed confidence that the country can overcome its debt crisis through a joint effort. He said that as a founder of the EU, Italy will be a strong member and not a factor weakening the bloc. Monti scored his first success by selling 3 billion Euros worth of 5-year bond. But despite this success, Italians are aware of the profound challenges they are facing.

Italy is on the verge of bankruptcy. Its public debt has reached 1.9 trillion Euros, 120% of the national GDP and twice the combined debt of Greece, Ireland, and Portugal. Italy’s unemployment rate is the highest in Europe at 8.5%, and the figure is nearly 30% among young people. More than 1 million young people are unemployed and around one fourth of Italy’s population is facing poverty. After the G20 summit in Cannes, France, Italy
agreed to have the IMF and the EU monitor its economic reform progress in return for EU financial aid. Reform measures include the sale of state assets worth 21 billion Euros, raising the retirement age from 65 to 67 in 2026, increasing the value added tax and fuel prices, reforming labor law and reducing taxes for infrastructure projects and companies recruiting young people.

Experts say that in the context of Italy’s gloomy economy, it will be hard for Monti to make an immediate change. Italy’s emergency measures have been unable to lift it out of the crisis and it might have to leave the eurozone if stricter measures are not imposed. The austerity measures and state budget reduction will stifle economic growth and employment in the short term, which will increase social instability. Italy’s public debt will not be fixed over night by a change of administration. In Greece, government austerity measures in return for financial aid have clashed with tax payer anger at government over-spending. Italians need to unite to support national interests. If the Italian economy collapses, the Eurozone would shatter, sparking a global crisis.   

Anh Huyen