Italy's European partners have no need to worry about its debt mountain and the government will take significant additional measures to tackle the issue, Prime Minister Silvio Berlusconi said today.
"No one has anything to fear" over Italy's debt, Berlusconi said in a statement, adding that there was no need for a lecture from the country's partners.
"No one is in a position to teach lessons to their partners," he said, after a weekend EU summit piled pressure on Italy to provide reassurances over its €1.9 trillion debt mountain.
Earlier, the government called an emergency cabinet meeting to review new austerity measures in light of the summit, with EU leaders set to meet again on Wednesday in the hope of nailing down a solution to the euro zone debt crisis.
The cabinet meeting would "examine measures that are consequent of the European Council held (Sunday) and in advance of the next summit to be held Wednesday," a statement said.
In Brussels, diplomatic sources said earlier today that European officials were mulling using a euro zone rescue fund to buy Italian government bonds in a bid to relieve pressure on its borrowing costs which have begun to rise again.
A plan for the European Financial Stability Facility (EFSF) to take over the bond-buying role of the European Central Bank is being worked on by top euro zone officials, they said.
In a bid to bring down Rome's borrowing costs, the European Central Bank bought billions of euros in Italian bonds in August when markets pushed yields up to the sort of unsustainable levels that triggered the Greek and other bailouts last year.
In Brussels yesterday, Berlusconi said the cabinet would try and plough through reforms, notably in the pensions system. "I wish to take advantage of this situation to see if we can advance measures I was unable to implement up until now due to differences within the majority," he said.
But in Rome, Berlusconi allies from the Northern League party said they opposed reform to the retirement system even if they recognised the issue needed addressing at a special cabinet session.
Before yesterday's summit, the Italian premier held one-on-one talks with EU president Herman Van Rompuy and another meeting with German Chancellor Angela Merkel and French President Nicolas Sarkozy.
"We have to reassure investors and reassure other states," Van Rompuy told a news conference. "Clearly, we are asking for a major effort on the part of the Italian authorities and I think they are ready to do it."
Van Rompuy said leaders would work "hand-in-hand" with Berlusconi in the coming days to make sure Rome "implements what it promised."
The doubts come despite budget cuts adopted by the Italian parliament in July and September aimed to bring the country back into balance from 2013 and reduce its debt.
European officials believe Italy has slipped back on its commitments since August, when the European Central Bank moved to support Rome by buying up its debt on the financial markets. The irritation is all the greater given that Europe is battling to protect Italy and Spain, its third and fourth largest economies, against contagion from the debt crisis.
