European Central Bank President Jean-Claude Trichet has said Italy must make structural reforms and maintain the commitment it made last month to cut its deficit and increase the flexibility of its economy.
He told Italian newspaper Il Sole 24 Ore that measures announced on August 5, when Prime Minister Silvio Berlusconi pledged to balance the budget by 2013, were "extremely important".
Trichet made no direct comment on the merits of the €45.5 billion package currently making its way through parliament but said it was essential that Italy implement measures to allow full exploitation of its medium and long-term potential.
He said Italy's economic growth had been "disappointing" and that structural reforms were necessary.
The austerity package was passed by parliament in record time last month to calm a market panic that hammered Italian bonds and sent borrowing costs soaring to unmanageable levels over worries about Italy's huge debt pile.
However, the programme is currently undergoing amendment after coming under severe criticism, most recently from employers' federation Confindustria, which on Thursday described it as "weak and inadequate".
After securing Italy's pledge for reform, the ECB stepped in last month to buy Italian government bonds and shield the euro zone's third-largest economy from a market sell-off that could threaten the future of the single currency.
Trichet denied, however, that there had been a direct, negotiated agreement over the measures in a letter to Berlusconi's centre-right government sent just before the austerity plans was announced. "There was no negotiation," he said.
Trichet repeated his long-standing call for governments in the euro zone to address weaknesses in their economies, step up mutual surveillance and reinforce governance.
Asked about the possibility of introducing common European bonds to shore up confidence in public finances in the euro zone, Trichet said that the European Financial Stability Facility already issued bonds guaranteed by Europe.
Meanwhile, Spain's lower house lawmakers have today voted overwhelmingly to place a cap on budget deficits in the constitution, a move that has cheered markets but angered many at home.
Lawmakers voted by 316 to five in favour of the constitutional reform, easily reaching the three-fifths support required after about 10 lawmakers walked out of a stormy debate.
The reform goes to the Senate next week.
