Interim leader takes control after Berlusconi’s resignation

The Associated Press

ROME — Economist Mario Monti accepted the task Sunday of trying to form a new government that can rescue Italy from financial ruin, expressing confidence that the nation can prevail if its people pull together.

Saturday, Berlusconi’s party said it supports Monti, with conditions.

Italy is under intense pressure to quickly put in place a new and effective government to replace him, one that can push through even more painful reforms and austerity measures to deal with its staggering debts, which stand at $2.6 trillion, or a huge 120 percent of economic output. Italy has to roll over a little more than $410 billion of its debts next year alone.

Markets battered Italy this past week amid uncertainty that Berlusconi would resign and questions over whether Italy’s divided parliament could support a replacement. But Italy’s borrowing rates improved after President Giorgio Napolitano made clear he intended to tap the politically neutral economist Monti to try to head an interim government.

The head of the International Monetary Fund, Christine Lagarde, said Saturday that Italy’s political transition over the next few days should send a “clear sign of clarification and of credibility” that the country is now getting its finances back in order.

The IMF will oversee Italy’s efforts to pull itself back from an economic disaster, monitoring how it implements reforms to shrink debt and spur growth, which is projected at a scant 0.6 percent this year and 0.3 percent next year.

While the euroskeptic Northern League remained opposed to Monti’s nomination, some lawmakers suggested they could support a Monti-led government to enact the additional EU-demanded reforms before elections are held in early 2012.