Italian Prime Minister Silvio Berlusconi was pressed by European leaders to do more to get the country’s finances in check to avoid falling victim to the euro’s debt crisis.
Berlusconi, in Brussels for a summit intended to find a solution to the crisis, held face-to-face talks today with European Union President Herman Van Rompuy and European Commission President Jose Barroso before a meeting with German Chancellor Angela Merkel and French President Nicolas Sarkozy.
“I never flunked” an exam in my life, Berlusconi told reporters when asked if he was concerned.
The demand for discipline underscored European leaders’ concern of the vulnerability of Italy, which has a debt load of more than $2 trillion, the most in the world after the U.S. and Japan, accounting for 118 percent of its gross domestic product. The European Central Bank started buying Italian bonds two months ago to contain borrowing costs as yields surged.
Berlusconi said he had a “long” conversation with Merkel last night at a meeting of European conservative leaders. Asked whether she was convinced by budget cuts Italy has taken, Berlusconi said: “I think so.”
The country will meet its deficit targets through 2013, Italian Finance Minister Giulio Tremonti told Barroso in a 20-minute phone conversation yesterday, according to the minister’s spokesperson.
The Italian government passed a 54 billion-euro package of spending cuts and tax increases in August to convince the ECB to purchase Italian bonds after the nation’s borrowing costs surged to euro-era records. The plan aims to balance the budget by 2013.
Merkel told reporters the meeting today was a “conversation among friends” and with the leader of “a great and important partner for the euro area.”
“Confidence won’t result merely from a firewall,” she said. “Italy has great economic strength, but Italy does also have a very high level of debt and that has to be reduced in a credible way in the years ahead.”
Asked if he has confidence in the capacity of Italy to carry out economic reforms, Sarkozy said he has confidence in the Italian authorities overall.
“Let’s trust the sense of responsibility of the Italian authorities as a whole,” Sarkozy said at a press conference in Brussels. He declined to answer a follow-up question about whether he had confidence specifically in Berlusconi, allowing Merkel to speak instead.