Italy to play central role at G20 summit, says top official

09:09, June 03, 2010      

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Italy is set to play a central role at the upcoming Group of 20 (G20) summit through the promotion of global, tighter financial rules as it has done since the outbreak of the crisis, an Italian top official told Xinhua in an exclusive interview Tuesday.

"We must not forget that Italy was a frontrunner in pushing for the recent approval of the legal standards by the Organization for Economic Cooperation and Development (OECD) that pave the way to reforming international financial markets with tighter rules and transparency," said Enrico Giovannini, President of the National Statistics' Office Istat.

The foundations for the new OECD legal standards were launched last year by the Group of Eight (G8) summit hosted in L'Aquila during the Italian presidency, he recalled.

"The upcoming G20 summit in Toronto and the following one in Seoul scheduled for November will be crucial in tackling structural problems of global finance," noted Giovannini.

When it comes to facing tough challenges Italy can be a model. "Our country has always demonstrated to be able to make sacrifices and take its own responsibilities in moments of crisis, as demonstrated by the government's recent approval of the 2010- 2011 budget plan" aimed at securing fiscal discipline by curbing public expenditures and tax dodging.

According to Giovannini, former OECD Statistics Director, the budget plan goes in the right direction towards supporting the country's weak economic revival. But more needs to be done to revamp the country's industrial sector.

"Italy has entered into recovery despite several dark sides. On one hand, the country has suffered from the drop in global trade but paradoxically at the same time a third of Italian firms have increased their exports during the crisis, especially medium- size manufacture industries," he noted.

He went on saying that Italy's main problem is its industrial fragmentation, where more than 90 percent of firms are small and thus face major problems of productivity. Another difficulty is represented by the services' sector that lacked innovation and competitiveness.

"Unfortunately in these two private areas - services and industry - the government's budget cannot do much,"Giovannini explained.

"The measure aims at reassuring global markets on Italy's financial stability. But stability does not merely concern the public sector, it also touches private firms and families."

Here is where lied Italy's strength: "Our country's private sectors' debt is low. Italian families have a high propensity to saving, where almost 11 percent of their income is invested."

In Giovannini's view the solidity of the private sector is what shields Italy from the "Greek public debt risk".

"I seriously do not believe Italy faces the same threat or that Greece's crisis may spread like a domino-effect here for two reasons. First: the Greek crack was triggered by wrong statistical procedures and public finance controls, which is not Italy's case. Second: Italy's private, patrimonial economy is much stronger," he observed.

Italy is not suffocated in the short run by an elevated debt, Giovannini stressed. On the other hand it has demonstrated that its debt has a high solvability because great part of it lies in the hands of the Italian bondholders themselves."

This outlook thus leads Istat president to express optimism on Italy's economic recovery. But the road ahead is uphill and full of obstacles. "Our main challenge today is to support innovation and competitiveness of our businesses, at present quite low, and boost their dimensional growth" so as to ease their penetration and consolidation on world markets.

For Giovannini investments in innovation, research and youth training are unavoidable for the future. "Italy must abide to the Europe 2020 strategy aimed at shifting and increasing funding towards highly-competitive sectors. All of Europe is growing at a slow pace, its population is getting older and public finances need constant monitoring." In brief, we're all in the same boat.

The role of the Italian National Institute of Statistics is to produce and distribute impartial and transparent information on the social, economic and environmental state of the country.

As the main producer of national statistics, it provides data to European and international organizations. The president is appointed by the head of state on the proposal of the prime minister and with the positive opinion of the parliament.



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