By Dow Jones Business News, September 29, 2013, 07:06:00 AM EDT
By Gilles Castonguay
MILAN--Italian Economy Minister Fabrizio Saccomanni sought to ease investor fears in a newspaper interview ahead of
the opening of markets Monday by saying the country's public accounts are in order even though it risks missing a
crucial deficit target as a result of the political crisis.
A day after the government fell into chaos with the resignation of ministers belonging to the center-right People of
Freedom, or PDL, party, Mr. Saccomanni said in the interview with Italian business daily Il Sole 24 Ore that the country
has until the end of the year to approve the budget measures required to meet a pledge to the European Union to keep its
deficit under 3% of gross domestic product.
"The  budget law is obligatory," he was quoted as saying in the interview published Sunday. "We can't avoid it.
A government will do it. Let's wait and see the development of the political situation, but there's no reason why it
can't be done."
At its final meeting Friday, the cabinet failed to approve budget measures of about 3 billion euros ($4 billion) to
help meet the 3% target.
"We have 0.1% of the GDP that we have to fix, but in the decree that we brought to cabinet on Friday, that had been
identified and there's still time to approve it before the end of the year," he is quoted as saying.
Despite the market volatility of recent weeks as a result of the bickering between the PDL and the center-left
Democratic Party in the coalition government, the markets will probably have taken into account the efforts made to
bring the public accounts in order, Mr. Saccomanni is reported as saying.
"Thanks to our efforts Italy's public accounts are in order," he is quoted as saying.
Mr. Saccomanni also pointed to the latest showing of a business sentiment index in the country, which rose in
September to its highest level since August 2012, the newspaper reports.
But Italy's positive run in bond auction results suffered a setback Friday.
It raised its maximum targeted EUR6 billion from the sale of new tranches of its December 2018 and March 2024 fixed
rate bonds, known as BTPs. The yield on the five-year bond was 3.38%, unchanged from its last outing at the end of
August. The yield on the 10-year bond rose to 4.50% from 4.46% a month earlier.
But those levels contrasted with Italy's two previous debt auctions this week when yields fell.
And the International Monetary Fund said Friday that political instability may endanger the modest recovery seen at
the end of this year, stressing the country will be mired in slow growth unless it makes additional reforms to its tax
system and labor market.
As of October, Italy's value-added tax is to rise to 22% from 21%.
Full story: http://www.ilsole24ore.com/art/notizie/2013-09-29/saccomanni-conti-posto-mercati-092305.shtml?uuid=
Write to Gilles Castonguay at email@example.com; Twitter: @GRCastonguay
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