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Monti tells Merkel Italy is OK

July 4, 2012

Italy's prime minister has said the country is on course to control its own debt difficulties after a meeting with German Chancellor Angela Merkel. Though he also revised annual deficit estimates upwards.

Italian Premier Mario Monti, right, shakes hands with German Chancellor Angela Merkel at Rome's Villa Madama, Wednesday, July 4, 2012.
Image: AP

"Italy does not need assistance," Mario Monti said in a joint press conference with visiting German Chancellor Angela Merkel. "Italy's budget deficit in 2012 will be 2 percent of gross domestic product - half of the European average, and next year the country will have a surplus in structural terms."

That deficit prognosis did represent an upward revision of prior estimates, which had stood at just 1.3 percent of GDP.

The technocrat prime minister, who is not affiliated with an individual political party in Italy, also said that he was working on reducing Italy's overall national debt - as well as its annual overspending.

Merkel, meanwhile, described the structural reforms being implemented by Monti's government in Rome as "excellent," saying both countries were "determined to overcome [Europe's debt problems] together."

Both parties downplayed talk of discord at last week's EU summit. Monti and his Spanish counterpart Mariano Rajoy managed to secure the prospect of direct financial help for their banks from the European Stability Mechanism, something portrayed in many quarters as a concession from Merkel.

The chancellor said it was normal at EU summits "that each country stands up for its own interests" and that in the end leaders reach a unanimous decision.

"That's exactly what happened on Thursday night and Friday morning," Merkel said.

Monti said that it was always a great joy to meet with the German chancellor.

Italy and Spain are considered potential candidates for so-called "bailouts" from their European partners, with Spain already having requested direct loans just for its banks. These two countries would be by far the largest to date to need financial assistance.

msh/mkg (AFP, dapd, dpa)