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Italy's Monti apologises to Berlusconi over debt comment

  • Newly appointed Prime Minister Mario Monti (L) poses with his predecessor Silvio Berlusconi at Chigi palace in Rome in this November 16, 2011 file photo. markets. (REUTERS/Stefano Rellandini/Files)

ROME: Italian Prime Minister Mario Monti apologised on Tuesday for suggesting the risk premium on Italian government debt would be much higher than it is if his predecessor Silvio Berlusconi were still in power.

Monti had said the difference between the yield on the country's benchmark bonds and safe-haven German Bunds, measuring the premium investors demand to hold riskier assets, would be "1,200 points" if the media magnate were still in office.

The remark came when Monti was asked in an interview why Italy's so-called yield spread over German securities, which was about 440 points on Tuesday, had remained so high despite the reform efforts of his government.

Berlusconi's party members quickly seized on the comment. Fabrizio Cicchitto, the chief whip of Berlusconi's People of Freedom party in the Chamber of Deputies, led the criticism, calling the remark "an unhelpful and stupid provocation".

Monti telephoned Berlusconi, according to a statement from Monti's office, saying he was "sorry that a banal and abstract extrapolation of a trend in the spread's levels ... could be construed as a political judgment, which was not at all intended".

After Monti's comment to the Wall Street Journal became public, Berlusconi's allies in parliament, whose support is vital for the survival of Monti's government, withdrew their support on a routine "agenda" vote in the lower house and refused to show up for a minor issue in the upper house.

They did, however, vote to definitively pass an important package of spending cuts aimed at shoring up public accounts and postponing a sales tax increase.

Italy was on the brink of defaulting on its 1.9-trillion-euro debt when Berlusconi, plagued by a sex scandal involving an under-aged prostitute, stepped down in November and Mario Monti took over to lead a technocrat government.

 
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