Grilli Says Bondholders Take Priority in Italy in Time of CrisisAndrew Frye
Italian Finance Minister Vittorio Grilli, whose 14-month tenure has been marked by tax increases and recession, said austerity was the only option as bondholders must take priority in a financial crisis.
Grilli was challenged today by European Parliament members in Brussels who questioned whether his budget rigor under Prime Minister Mario Monti did more harm than good. Grilli said their austerity-first strategy results from leaders asking themselves, “Will the market continue to fund me, will it continue to buy my bonds?
‘‘Then you have to take that as the first priority,’’ Grilli said.
Grilli is defending his record as Monti campaigns for a second term. The 69-year-old Monti has been blamed by rivals including his predecessor, Silvio Berlusconi, for taking money out of the hands of consumers through tax increases. While the recession deepened in the second half of last year, Grilli said his policies eased the financial crisis and set the conditions for future growth.
‘‘It’s impossible to have credible growth rates without stabilized financial markets,’’ Grilli said. ‘‘It was like trying to build a house on sand. The first fire we had to put out was to restore the market’s confidence in Italy and in Italy as a debtor country.’’
Yields on Italian 10-year bonds fell to 4.21 percent today, compared with 6.45 percent on Nov. 12, 2011, when Berlusconi resigned.
The debate over austerity has defined the Italian campaign before a vote on Feb. 24-25. Berlusconi, 76, has vowed to roll back Monti’s austerity, while frontrunner Pier Luigi Bersani, who leads a coalition of center-left parties, has said he will respect the government’s budget commitments.