ROME — Italy's cabinet adopted a package of reform proposals at emergency talks Wednesday but kept mum on the contents ahead of a G20 summit in which Silvio Berlusconi wants to show he is fighting the crisis.
The cabinet has "approved an amendment containing the measures that the prime minister indicated in his letter to the European Union" last week, a government source told AFP, without providing any further details.
The measures still have to go before parliament for final approval.
Berlusconi last week made promises to get Italy's finances in order at a European summit under pressure from eurozone leaders France and Germany but there have been fears he could be held back by infighting in his government.
He said the retirement age would be raised to 67 beginning in 2026, state assets will be sold off and labour legislation will be overhauled to make it easier to fire employees -- a proposal that infuriated trade unions.
Berlusconi's key coalition partner, the populist Northern League party, has also warned the prime minister against any increase in the pension age.
Among other measures being considered are reforms to boost competition among lawyers and dentists, a major boost to infrastructure projects and reforms to ease Italy's notoriusly complex bureaucracy.
Berlusconi is keen to travel to the G20 summit with results in hand, after a stock market bruising on Tuesday in which Italy suffered its worst session since the start of the global financial crisis in October 2008.
Italy's leading companies and eurozone leaders France and Germany have urged Berlusconi to move quickly on long-promised reforms to cut debt and boost growth but the government has been mired by recent infighting.
"The commitments undertaken in Europe to reduce pubic debt and launch a wide programme of structural reforms must be honoured with speed and coherence," Bank of Italy governor Ignazio Visco told reporters.
Visco, who this week replaced new European Central Bank president Mario Draghi, assured investors that Italian banks were "stable" but called for "decisive" action to put Italy's public finances in order.
The Milan stock market meanwhile recovered somewhat on Wednesday and closed 2.31 percent higher after crashing 6.8 percent on Tuesday.
But the rate on 10-year government bonds was still high at 6.23 percent -- close to the record 6.397 percent reached in August.
Analysts said borrowing rates above 6.0 percent could make it difficult for Italy to finance itself and 7.0 percent would be a danger point.
The Bank of Italy however said it had carried out a "stress test" that showed Italy would still be able to reduce its public debt to 115.5 percent of output even if the rate rose to 8.0 percent in January 2012.
Italy's current public debt is at around 120 percent of output.
The market turmoil has fanned investor fears that Italy -- the eurozone's third largest economy after France and Germany -- could be the next country to be dragged into a debt spiral in the wake of Greece, Ireland and Portugal.
Berlusconi's popularity ratings meanwhile have hit a record low of 22 percent, according to the latest poll released on Wednesday, and the centre-left opposition has called on the prime minister to resign.
Pier Luigi Bersani, the leader of the main opposition Democratic Party, said that Italy needs "credible people on the international stage" with broad support in parliament -- a reference to Berlusconi's meagre majority.
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