Italy sets out its reforms

ITALY’S government said it was planning sweeping reforms to balance its budget and stimulate growth yesterday as it fights to convince markets it can manage its huge national debt.

Finance minister Giulio Tremonti named changes such as raising Italy’s capital gains tax from 12.5 per cent to 20 per cent, selling off state assets and liberalising its labour laws in a bid to bring its borrowing costs down.

European Central Bank president Jean-Claude Trichet sent Prime Minister Silvio Berlusconi a letter last week setting out a range of reforms for Italy to make in return for the ECB buying its debt.

Tremonti said the government was ready to comply with those but was still working out detailed plans to meet its demand to balance the budget by 2013. “We have to pass a very strong fiscal adjustment package,” he said. “The detailed numbers are currently being worked out.”