Arab Today, arab today merkel italy\s reforms are \impressive\
Last Updated : GMT 08:53:10
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Merkel: Italy\'s reforms are \'impressive\'

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Arab Today, arab today Merkel: Italy\'s reforms are \'impressive\'

Berlin - AFP

German Chancellor Angela Merkel heaped praise on Italy for its deficit-cutting efforts after talks Wednesday with Prime Minister Mario Monti who insisted its achievements had begun winning market approval. The two leaders met in the German capital in the latest shuttle diplomacy over the near three-year eurozone debt crisis as Spain lurches closer to a bailout and Greece races to secure aid to keep it in the bloc. \"The wide-ranging consolidation and reform agenda of the Italian government is impressive ... and I am personally convinced that these reform efforts will bear fruit,\" Merkel told a joint press conference. However the two leaders disagreed over proposals to grant the eurozone\'s future rescue fund, the European Stability Mechanism, a banking licence to enable it to borrow funds from the European Central Bank. Merkel said she agreed with ECB president Mario Draghi that enabling the 500-billion-euro fund to act as a bank and therefore have unlimited firepower was \"was not compatible\" with European treaties.  Monti said a banking licence was \"conceivable\" but as part of a wider package of measures and in a longer-term perspective. He is battling to show markets that Italy, the eurozone\'s third largest economy, can keep on top of its massive debt with a series of austerity moves and tax hikes, as well as lay the foundation for future growth with reforms. \"Markets are in the process of recognising the successes,\" Monti said, after Italy raised 9.0 billion euros ($11.3 billion) at a six-month debt sale on Wednesday, paying sharply lower rates for the second day running owing to growing expectations of ECB intervention. Merkel also described the successful bond auctions as \"hopeful.\" Hours before arriving in Berlin, Monti again ruled out his country asking for a bailout. \"After the efforts Italy has made and the results achieved, I certainly don\'t want it to be subjected to a sort of intrusive supervision, like the other countries which had to ask for help to balance their budgets. \"We are not in that situation,\" Monti told Italy\'s economic daily Il Sole 24 Ore. Asked whether they had discussed the possibility of Italy applying for a sovereign bailout, Merkel said \"nothing concrete\" had been put on the table. \"We discussed the fact that the ECB is preparing decisions. We know our funds, the EFSF and the ESM, and feel well-equipped politically,\" said Merkel, referring to the EU\'s two bailout pots. She was generally upbeat in her assessment of what had been achieved in battling the debt crisis although she acknowledged the push for a solution to end the turbulence was not over. \"We know that we have not completed our stabilisation but we have achieved a lot in a short time,\" she said, adding they believed the eurozone had the \"necessary means\" to strengthen and stabilise the single currency area. One such measure hinges on the German Constitutional Court which is due on September 12 to rule on legal challenges to the ESM, a move holding up the fund\'s ratification, and the fiscal pact for tighter budgetary rigour. Merkel said she and Monti believed the ESM in particular was \"of the greatest importance\". ECB chief Mario Draghi told German weekly Die Zeit on Wednesday that the central bank would always act within its mandate to ensure price stability but exceptional measures might be required to achieve that. He has already said the Frankfurt-based bank \"may\" resume controversial purchases of sovereign bonds of bailed-out eurozone members to help drive down their costs, but has so far not revealed under what conditions. Monti, a former European Commissioner, has recently become prominent in shaping eurozone crisis-fighting plans, winning concessions at an EU summit in June together with the Spanish leader. EU leaders are gearing up for an October 18-19 summit as well as other key meetings and decisions over the coming weeks as Spain\'s plight again rises to the forefront of the three-year crisis. On Tuesday, its debt-struck Catalonia region, responsible for one-fifth of Spanish economic output, said it was seeking a 5.0-billion-euro ($6.3-billion) central government rescue. Despite Madrid having secured a 100-billion-euro eurozone rescue loan for its banks in June, analysts believe Spain\'s high borrowing costs will still force it to seek a sovereign bailout before a repayment crunch in October. Meanwhile Greece is racing to come up with 11.5 billion euros in savings to unlock bankruptcy-saving loans from the European Union and the International Monetary Fund.

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