ROME (Reuters) - Prime Minister Mario Monti urged Italy’s political parties on Thursday to agree on a new electoral law to reassure nervous financial markets of the stability of a new government after elections next year.
In an interview with TGCom24 television, Monti praised the big parties from both left and right which have backed his technocrat government in parliament despite painful, unpopular belt-tightening reforms.
However with elections coming up by May at the latest, the parties have been increasingly preoccupied with designing a new electoral law, absorbing valuable political capital while major economic reforms await.
Quick agreement would give “a sign of the progress made in the Italian political world and financial markets, and just as importantly Italian citizens, who do not count for less than the markets, will be reassured”, Monti said.
All sides say they want to change the current law, adopted in 2005, which forces voters to choose a single list of candidates and does not allow them to choose their own representatives directly.
But after weeks of wrangling, serious disagreements remain, fuelling market doubt about the capacity of Italy’s much criticized political class to agree significant reforms once Monti steps down.
Monti himself brushed off speculation about the chance of an early election and said his government intended to get as much as possible done before it leaves office.
“The objective isn’t to stay there a long time, it’s to do everything possible in the time allowed to put the economy and Italian society on the path of growth,” he said.
“The government wants to be sure that, when its task is complete, it leaves an Italy that is less in a state of emergency, with muscles that are better trained for economic, social and civic growth.”
Monti also welcomed European Central Bank Governor Mario Draghi’s pledge to save the euro zone, saying this offered important reassurance to countries struggling to implement reform in the face of threatening market turmoil.
Monti said Draghi’s pledge to do what was needed to save the euro and his acknowledgement that the crisis was stopping normal monetary policy working was “quite evident but important coming from him”.
Italy has faced mounting pressure in the financial markets in recent weeks despite the painful tax hikes and spending cuts made by Monti’s government, with yields on its benchmark 10 year debt over 6 percent, some 470 basis points above safer German Bunds.
“This intervention was a reassurance that our diagnosis is correct,” Monti said, adding that the risk premium - or spread on Italy’s sovereign debt - remained too high despite economic reforms and measures to shore up public finances.
“This depends probably on doubts and uncertainties in the markets about the euro system in general,” he said.
Reporting By James Mackenzie; Editing by Mark Heinrich