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German analysts deem eurozone bailout fund unable to cover Italian debt

(Xinhua)

14:39, August 08, 2011

German economic analysts are deeply sceptical about European bailout fund's ability to save Italy's ailing economy, should the country fail to stave off by itself the spreading debt crisis, German news magazine Der Spiegel reported on Sunday.

Experts told the weekly magazine that Italy's financial needs are immense enough to exceed the capacity of the 440 billion euros (624.8 billion U.S. dollars) European Financial Stability Facility (EFSF), even if the eurozone's emergency fund could be tripled in size.

They pointed out that as Italy's state debts has surpassed 1.8 trillion euros (2.6 trillion U.S. dollars), equivalent to roughly 120 percent of its national output, eurozone partners cannot cover the guarantee for the country's debt.

Maintaining its usual stance, Germany stressed that Italy should wade through its current crisis on its own with greater retrenching efforts to slash budgets and deficits, in stead of asking for exorbitant bailouts from others.

Economists claim that the EFSF should be further enlarged, to prevent any further fund shortage in sustaining other economies mired in debt woes, like Portugal, once Greece's bailout has been withdrawn.

The European Central Bank (ECB) was scheduled to hold a rare Sunday conference call, to decide whether it will buy Italian and Spanish debt on Monday to stabilize prices.

Italian Prime Minister Silvio Berlusconi on Friday pledged to expedite reform aimed at balancing Italian budget by 2013.

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