Italy’s parliament finally approves austerity package

2011-09-15 00:00

ROME — Italy’s parliament yesterday gave final approval to an austerity package backed by the government of Prime Minister Silvio Berlusconi and deemed necessary by the European Union to allay market fears over Italy’s huge public debt burden.

The lower house chamber of deputies approved the €54 billion (R546 billion) package by a vote of 316-302. Last week parliament’s upper house, the senate, approved the measures.

The bill envisages raising value-added tax from 20 to 21%, introducing a super-tax on high earners, and raising the retirement age for women in the private sector to 65.

Yields, or the rate of interest the government has to pay lenders, on Italian government bonds have surged over the last two months amid market fears that the country will default on repayment of its public debt.

In 2010, Italy’s public debt amounted to 116% of gross domestic product, making it one of the world’s highest.

Many analysts say that borrowing costs are unsustainable for Italy, the eurozone’s third largest economy.

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