We're Not Greece: Italian Prime Minister Monti
Special to CNBC.com
Amid concerns that Italy may also need a bailout from the European Union and IMF, Italian Prime Minister Mario Monti told CNBC Friday that Italy is in a stronger financial position than Greece.
"The distinction between Greece and Italy from the point of view of markets is massively different" than a few years ago, he said. "You go into high-thrill fiction when you consider something I don't want to repeat concerning Italy and the euro."
Monti said an austerity dealfor Greece is important for the European Union, for Greece and for the overall stabilization of the market. He has "no clear expectation yet" that a deal will be reached but thinks eventually it will. Even in the even that Greece would default, Monti said he doesn't see Greece leaving the euro.
He said Italy has learned the importance of making hard decisions fast after the turmoil of the Silvio Berlusconi years. Since Jan. 1, the nation has achieved measures to balance the budget by 2013, "which means a couple of years earlier than other European Union states," Monti said.
Italy is also putting in place a package of liberalization rules to open its markets to more competition and should be passed into law by Parliament "in a matter of weeks."
He said the country has been "very careful not to undermine growth too much."
The only other change left to tackle is dealing with labor unions, he said, and "we intend to have an agreement by the end of March" that will "make the labor market more flexible and more modern."
"Excessive burden of overcomplicated regulations is traditionally one of the weaknesses of the Italian economy," said Monti, the EU's former competition minister.
Another issue for Italy is that the governments seem to change every year. Monti said he is confident his government's reforms won't be repealed by future Italian governments because the political costs would be too high.
"These reforms demand sacrifice," he said. "In this peculiar political configuration we have now, the political cost is borne by this government, which is nonpolitical...When political parties come back they ill have no incentive to undo what we did because the political cost is incurred [and] the benefits will be seen. There is no big risk of reversibility."
Monti spoke to CNBC from the New York Stock Exchange the same day Standard & Poor's downgraded 34 of Italy's 37 banks, including Unicredit and Intesa Sanpaolo, citing a reduced ability to roll over their wholesale debt and expected weak profitability.
He downplayed the downgrades, saying the decision was "largely the mechanical effects of previous decisions. The high public debt of Italy is a well-known fact of life."
More important is whether the government is "putting its house in order. The rating agencies are very appreciative of what the Italian government is doing."
Finally, he said his meeting with President Obama on Thursday in Washington was very productive.
"My goal was to explain to the president what Italy is doing in terms of budgetary discipline and also preparing for conditions of growth," Monti said.
"I have the impression of support" from the U.S., he said, "not financial resources — we don’t need them — but political support and an effort on the part of the United States to put the global economy, through the U.S. economy, in a better condition."
— Reuters contributed to this report.