Italy debt 'problem' would hit heart of eurozone: France

27th November 2011, Comments 0 comments

France warned Sunday that any problem with heavily-indebted Italy would affect the very heart of the eurozone.

The statement from President Nicolas Sarkozy's office came as an Italian newspaper reported that the International Monetary Fund (IMF) could bail out Italy with up to 600 billion euros ($794 billion).

"If there is an Italian problem, then it is the heart of the eurozone that is hit," the statement said. "It is up to Italy to do what it has undertaken to do."

Sarkozy and German Chancellor Angela Merkel have said a debt collapse in Italy would be "the end of the euro," Italian Prime Minister Mario Monti's press office said Friday.

At a mini-summit with Monti in Strasbourg on Thursday, Merkel and Sarkozy "said they were aware that a collapse of Italy would inevitably be the end of the euro," it said in a statement.

Italy's 1.9-trillion euro public debt and low growth rate have spooked the markets in recent weeks, prompting concern that it could have to seek a bailout like fellow eurozone members Greece, Ireland and Portugal.

Italy's La Stampa newspaper, citing IMF officials in Washington, said the fund could bail out the country.

The money would give Monti a window of 12 to 18 months to implement urgent budget cuts and growth-boosting reforms "by removing the necessity of having to refinance the debt," it said.

© 2011 AFP

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