Rating agency Moody's will monitor the ability of the newly formed Italian government to overhaul the economy, a senior Moody's official told an Italian newspaper today.

"We will have to verify the commitment of the new government and its ability to resolutely pursue the huge structural reforms the country needs to improve its creditworthiness," a senior credit officer at Moody's said.

"For now the situation remains difficult," the officer said.

The ratings agency said on Friday it had kept Italy's sovereign debt rating at Baa2 thanks to the country's reasonably low current cost of funding and its primary surplus.

But Moody's maintained its negative outlook for Italian sovereign debt because of prolonged economic crisis.