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Ten Italian cities face financing strains -report
ROME, July 23 |
ROME, July 23 (Reuters) - Ten Italian cities including Naples and Palermo face problems managing their finances, daily La Stampa reported on Monday, underlying growing concerns about the sustainability of local finances in the euro zone's third largest economy.
"At least 10 big cities are at risk," the newspaper quoted unnamed government specialists as saying.
Prime Minister Mario Monti expressed concern last week that the autonomous region of Sicily was on the brink of defaulting on its debt.
The funding strains outside the scope of central government accounts echo events in Spain, where media reported half a dozen regional authorities are ready to follow Valencia in requesting financial help from Madrid to keep them afloat.
Unlike in Spain, Italy's local funding problems would not have an immediate impact on the country's 2 trillion euro public debt pile, but they do underscore the growing pressure on all levels of government finances as the recession bites.
La Stampa said a provision in the government's spending review obliging municipal authorities to make a 25 percent cut in the book value of certain assets had revealed big holes in municipal accounts.
The assets in question include anticipated revenues from sources such as fines or waste management taxes, often over-estimated in budget plans by authorities that know they cannot expect to collect all of the projected funds.
With the economy deep in recession and the central government looking to cut spending sharply, the heavy costs of bloated and wasteful local public administrations, particularly in southern Italy, are being laid bare.
But local authorities have also long complained that successive budget cuts have squeezed their resources while leaving them responsible for many vital municipal services.
Even in the prosperous north, some cities are having trouble with Alessandria, near Genoa in the northwest declaring a state of financial emergency last month under the weight of 100 million euros in debt.
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