Europe has 'no alternative' but to balance its books: Draghi

11th May 2010, Comments 0 comments

European governments have "no alternative" but to balance the public finances, Italian central bank head Mario Draghi said Tuesday, a day after the EU mustered a spectacular rescue for indebted states in the eurozone.

"For all of Europe, there is no alternative but the consolidation of public accounts and a recovery, which we are getting thanks to structural reforms," Draghi said in Zurich, on the sidelines of a conference on monetary reform.

EU member states agreed Monday a rescue package worth nearly a trillion dollars to stabilise the euro, which has come under intense pressure due to high debt and budget deficit levels in the eurozone.

Italy is among several eurozone countries with budget deficits and debt. The finance ministry last week hiked the estimate of total public debt for 2010 to 118.4 percent of Gross Domestic Product from 116.9 percent while the EU limit is 60 percent.

Politicians have slammed speculators for targetting eurozone states and Draghi too said that speculation was a "battle that we have to fight," even if it was not one that could be won swiftly.

Draghi is attending a closed-door conference organised by the Swiss National Bank and the International Monetary Fund.

Organisers would not issue a list of participants but a copy of the programme indicates that investor George Soros, Chinese central bank chief Zhou Xiaochuan and European Central Bank head Jean-Claude Trichet were due to attend.

Donald Kohn, vice chairman of the US Federal Reserve, earlier told participants that economic imbalances, notably exchange rate rigidity, had led to the recent worldwide financial crisis.

© 2010 AFP

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