Italian Fiscal and Economic Progress

     Italy’s fiscal and economic reforms are paying off in a number of areas, which is reflecting increased investor confidence. 

     The Italian stock market has risen, while the yield on Italian bonds has dropped significantly and the spread between the price of Italian and German bonds has decreased sharply. The yield has dropped below the critical 7% level to nearly 5.5%, while the spread dropped from the critical 500 basis points over the price of German bunds to well below 400. These decreases will ease the Italian debt service.  When sovereign debt of other states in the European Union reached those critical levels, they were forced to seek a bailout.  Italy has been the only one to escape such a fate after hitting those levels.

     Meanwhile it was reported by ANSA that millions of euros have been collected since last year, when the Berlusconi government introduced measures to crack down on tax cheating. According to the Italian news agency, efforts to match income to tax reports have borne fruit, while Italy is also cooperating better with Switzerland in reducing tax havens. The Monti government is increasing the efforts, ANSA reports. 

     The Italian Parliament has approved a measure to prevent a scheduled large increase in Members’ pay, according to ANSA. Italy’s large parliament is among the highest paid in Europe, ANSA reports. The measure follows the lead of Premier Mario Monti, who is giving up all of his pay, during this period of austerity. 

     ANSA also reported that Fiat turned a profit of more than a billion and a half dollars, thanks to Chrysler, which earned a its first full-year profit since 1997, despite repaying the American and Canadian governments several hundred millions of dollars in loans six years early. 

     Italy’s progress is continuing to win praise across Europe. It is refocusing attention on Greece, as people are gaining confidence that Italy, the European Monetary Union’s firewall against debt contagion, will hold, despite fears of a Greek default.