Austerity budget to be passed in Italy

Italian financial markets were in a calmer mood on Wednesday as lawmakers accelerated work on austerity measures. The improvement comes after Finance Minister Giulio Tremonti's said his proposed austerity budget would balance the budget by 2014.

“Austerity is fairly important for the Italian economy,” says Kishore Jayabalan, the director of the Rome office of the Acton Institute. But he says even with austerity, Italy will need economic growth to pay its debts.

“The lack of growth has been going on for over a decade, and without any growth, Italy is not going to be able to pay back off its debt,” he told Vatican Radio. Jayabalan pointed out the size of the country’s political class, and the amount of money they make.

“I think at some point the Italian political class is going to have to start realizing they are taking up too much of the country’s wealth,” he said. “They are soaking the country.”

“They are creating all kinds of impediments for economic growth. If you want to get the Italian economy reformed, the political class not only is going to have to do things like get rid of regulations, but really cut down the bureaucracy, because that is what is really bringing down the Italian economy,” Jayabalan said.

Listen to the full interview by Charles Collins with Kishore Jayabalan: