Italy’s debts deepen from helping other eurozone countries

Deeper and deeper – Italy’s public debt hit an all-time high in June of almost two trillion euros.

The figures were released by the central bank along with data that showed Rome’s annual budget deficit was bigger than a year earlier.

The main reason for that was the additional money Italy is having to pay as its share of bailouts for other eurozone countries.

Italy’s borrowing costs remain high. Interest on its benchmark bonds is still close to six percent despite tough austerity measures introduced by Mario Monti’s technocrat government. The cost of shorter term borrowing is also creeping up.

With the country mired in a deep recession, the financial markets – the bond buyers – are sceptical about Italy’s ability to bring down its debt pile. It is currently the equivalent of around 123 percent of GDP. That is the second highest debt in the eurozone after Greece.

Rome has just said it will miss its target for cutting the deficit this year, but insisted that as that is due to the steep recession, no further austerity measures are needed.

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