Monti Apologizes To Berlusconi After Saying Former PM Would Have Destroyed Italy's Ability To Borrow

In an interview with the Wall Street Journal last month, Italian PM Mario Monti criticised former PM Silvio Berlusconi and his government, saying “I think that if the previous government were still in power, Italy’s spreads would now be at 1200 or something.”

Italy’s spreads are the difference between the amount Germany and Italy pay to borrow cash on the open market. As investors lose faith in a country, its spread over the benchmark, stable Germany moves higher, so Monti was suggesting that Berlusconi and his government exacerbated investor distrust in Italy’s ability to pay off its debts.

Now Monti has had to apologise for those statements, after lawmakers from Berlusconi’s People of Freedom party threatened to unseat him if he continued to criticise Berlusconi.

The People of Freedom hold the most seats of any party in Parliament—276 in the lower house and 146 in the Senate.

According to a statement from Monti’s office obtained by Bloomberg, Monti called his comments “a banal and theoretical trend extrapolation of the values of the spread” which was “received as a political statement.”

Berlusconi has denied his government’s responsibility for rising spreads. He posted the following picture prominently on his Facebook page last month. It reads (via Facebook’s translation function): “The SPREAD does not stop…but it was not the fault of Berlusconi.” The side text adds, “We were subjected to a violent campaign on spreads, but I have always known that they are the result of speculation and has nothing to do with the fundamentals of a country.”

Click to enlarge.

berlusconi facebook spreads comment

Photo: Facebook

In reality, the premium Italy was paying to borrow did fall markedly after Berlusconi left office, and Monti’s reasonably effective reform agenda has even helped convince investors that Italy is less of a default risk than Spain.

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