February 3, 2012 / 12:40 PM / 7 years ago

Italy seeking to end IMF monitoring exception -source

MILAN, Feb 3 (Reuters) - Italy is discussing with the International Monetary Fund ways to soften the terms of an enhanced surveillance agreed last November by former Prime Minister Silvio Berlusconi, a source close to the matter said on Friday.

The euro zone third-largest economy had been forced to request a monitoring mission from the IMF to placate worried investors and reassure European governments as its borrowing costs rose to dangerously high levels.

But a new technocratic government, led by respected economist and former European Commissioner Mario Monti, has since alleviated concerns about Italy’s commitments to growth-boosting and belt-tightening reforms.

“Italy and the IMF are discussing on a bilateral level about the possibility to modify the initial mandate of the enhanced surveillance ... and that the fiscal monitoring be done under the Fund’s normal monitoring process,” the source said.

The monitoring mission could be scaled down to a more routine monitoring mandate under article IV of the IMF, a compulsory assessment undergone annually in every member country.

“It could become a reinforced article-IV mission, brought forward compared to the normal dates, considering that the country’s current situation has changed a lot since November,” the source said, adding that nothing had been decided yet.

Italy had become the first G7 country to request an enhanced surveillance mission from the IMF, a procedure normally reserved for emerging market countries.

The Italian Treasury declined to comment. No one at the IMF was immediately available for comment.

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