Italy's Monti defends his reform achievements in Davos

DAVOS, Switzerland Wed Jan 23, 2013 6:17pm EST

1 of 3. Outgoing Italian Prime Minister Mario Monti addresses the annual meeting of the World Economic Forum (WEF) in Davos January 23, 2013.

Credit: Reuters/Denis Balibouse

DAVOS, Switzerland (Reuters) - Outgoing Prime Minister Mario Monti defended his reform efforts in front of an audience of the world's financial elite on Wednesday and accused past governments of plunging Italy into a spiral of unemployment and stagnation.

Monti, who was given a rare opportunity to address the annual World Economic Forum, also got an open endorsement from the influential forum's founder, Klaus Schwab, for his decision to lead a centrist list at a general election in February.

"I owe it to my society, to those who pay the intolerable price of unemployment," said Monti, explaining to delegates in Davos, Switzerland, his decision to enter the political arena after leading a technocratic government for just over a year.

"They are the victims of governments that have not confronted tax evasion, corruption, rent-seeking..." he said, referring to lack of competitiveness in the economy.

The well-disposed Davos audience of bankers, businessmen and economists would have come as a welcome change from an increasingly hostile climate at home, where Monti has faced increasing pressure from opponents on both the left and right.

Opinion polls ahead of national elections on February 24-25 currently point to centre-left leader Pier Luigi Bersani as the next prime minister, possibly in a coalition with Monti.

However former prime minister Silvio Berlusconi, a fierce critic of Monti, is closing the opinion poll gap, raising questions about the stability of a new government.

Monti, a former European Commissioner, has been a favorite with the financial establishment since he was appointed in late 2011 to lead Italy out of a crisis that threatened to scupper Italian public finances and badly dent a fragile euro zone.

But elections have neared, his reform record has faced skepticism from critics who say he did not go far enough, and political rivals have argued that his austerity policies based on steep tax hikes have driven the economy into deep recession.

At Davos, Monti rejected the criticism, pointing to restored international credibility, a reform of the pension system, a promise to present a balanced budget in structural, or growth-adjusted terms this year and liberalization measures.

The commitment to reforms were instrumental, Monti said, in changing investors' attitude towards Italy, something which is manifested in the halving of the cost of government debt since he took office at the peak of the euro crisis last autumn.

Yet the country, which he sees intrinsically linked to the future of the European Union and the euro, needs to continue with the same pace on the path of reforms, he said.

"Whatever the next government in Italy, I hope they will be able to keep the same spirit of emergency and urgency that we felt as we were on the brink of the catastrophe," he said.

(Reporting by Lisa Jucca; Editing by Louise Ireland)