Italy’s senate approves budget cuts

The Italian senate has given an initial approval to EUR 48-billion budget cuts aimed at decreasing the European country’s budget deficit in a period of three years.

On Thursday, the Italian senate, where the government holds a comfortable majority, passed the proposed cuts with 161 votes in favor, while 135 representatives voted against the austerity measures, AFP reported.

The unpopular austerity cuts target funding to local governments and health services, and plan to raise the retirement age.

“If we don’t have a balanced budget, then [the] public debt — a monster from our past — would devour our future and the future of our children,” Italy’s Economy Minister Giulio Tremonti said.

The measures are now set to go before the lower house of the Italian parliament on Friday for a final approval, with the country’s main opposition Democratic Party saying it will vote against the cuts.

Earlier, the International Monetary Fund (IMF) urged Italy, the eurozone’s third largest economy, to implement decisive budget cuts to avoid getting hit by the eurozone debt crisis.

As Italy is sitting on EUR 1.6 trillion of outstanding government bonds, any increase in the country’s borrowing costs could severely disrupt efforts to cut a debt mountain equivalent to 120 percent of the European country’s gross domestic product.

The eurozone plunged into a financial crisis in early 2010, as the specter of insolvency threatened heavily debt-ridden countries such as Greece, Portugal, Italy, Ireland and Spain.