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Italy approves its share of Greek rescue

May 7, 2010

by Guy Dinmore in Rome

Published: May 7 2010

Italy’s centre-right government approved its contribution to the European Union’s rescue package for Greece on Friday by authorising loans of €14.8bn ($18.7bn) over three years with a first tranche of €5.6bn, Ansa news agency reported.

The approval was issued in the form of a decree which takes effect after approval by the head of state. A government spokesman said details would be made public shortly.

Italy’s share of the bail-out is proportionally more than the exposure of its banks to Greek debt. Officials said this reflected Italy’s political determination to help Greece and thus to prevent “contagion”, but also confidence in Rome’s ability to raise the funds despite its own considerable debt refinancing needs.

The decree must be approved by parliament within 60 days to remain in force. The coalition led by Silvio Berlusconi, prime minister, has a comfortable majority but politicians say his government needs to deliver a convincing message explaining why Italian belts have to be tightened while Italy helps rescue Greece.

Moody’s rating agency issued a report at a Milan conference on Friday saying Italy’s credit outlook for 2010 remained stable.

“The effort required for the country to keep the debt under control seems relatively modest compared to other European countries where corrections are brutal,” Moody’s said, quoted by Bloomberg.

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