Italian central bank urges reform as public debt falls slightly

The Italian central bank Friday called for the adoption of reform measures in the country to deal with structural defects that block economic growth, as latest figures showed its public debt fell slightly. The Bank of Italy said Italy, under intense market pressure, needs to employ appropriate economic policies to cut fiscal deficits and improve its structural defects to spur economic growth.According to the bank's data, the country's public debt fell slightly to 1.89 trillion euros (2.59 billion U.S. dollars) at the end of August, compared with 1.911 trillion euros (2.62 billion U.S. dollars) the previous month. A 2.38-percent increase in tax revenue in the first eight months of this year helped to check massive growth in public debt, it said. While Italy's leading banks have recently suffered a wave of downgrades by Moody's, S&P's and Fitch, the central bank remained confident that the fundamentals of the country's banks were still solid. Meanwhile, a report issued Friday by the European Commission expressed concerns about the prospects of Italy's economic growth. "More incisive actions are needed" in Italy, it said, citing as example the need to "promote environmental innovation, stimulate competition in the services sector and encourage the size of enterprises." Prime Minister Silvio Berlusconi, whose government experienced a corruption vote in parliament last month and won a vote of confidence at the Lower House Friday, said Thursday that the task and duty of his coalition was to defend Italy from the economic crisis. The Italian government approved on Friday a financial stability decree aimed at securing public finances by cutting down the expenditures of several ministries. Berlusconi said he will release an economic stimulus next week. As the eurozone's third largest economy, Italy's less developed high-tech sector, research and development and lack of a national energy plan have all contributed to its structural weaknesses. Italy's public debt was at 119 percent of the GDP last year, second only to Greece in the eurozone, and was growing larger in the first half of this year, hitting 1.9 trillion euros (2.61 trillion U.S. dollars) in June.