Rome - Italy is failing to cut debt quickly enough but is past the worst of its crisis, the EU's Economic Affairs Commissioner Olli Rehn said in an interview in La Repubblica newspaper on Tuesday.
“Italy should respect a certain speed of debt reduction, and it is not doing so. The structural adjustment should have been equal to half a percentage point of gross domestic product, and it is only 0.1 percent,” he said.
“And it is for that reason that Italy has no room for manoeuvre,” Rehn said.
The EU commissioner said the “nightmare ... of 2011, when Italy was at the centre of the storm on the financial markets” was over, but he was “sceptical” that privatisations and a spending review would reduce debt quickly enough.
Recession-hit Italy is struggling to increase efficiency and competitiveness.
Italy's public debt currently stands at about 134 percent of gross domestic product (GDP) compared with the EU ceiling of 60
percent Ä the second-highest ratio in the European Union after the debt ratio in Greece.
Rome announced last month that it is selling stakes in eight companies including energy giant Eni in a raft of privatisations aimed at raising up to 12 billion euros ($16 billion).
“The spending review is very important, but it will be even more so if it puts in place spending cuts that will take effect by 2014,” he said.
Rehn said Italy had “vast potential for growth” but needs to “reform its economic and judicial systems.”
Official data in November showed the economy, the third-biggest in the eurozone, contracted by 0.1 percent in the third quarter and shrank by 1.9 percent over 12 months. - Sapa-AFP