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World

IMF says Italy faces 'monumental challenge'

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Opening sequence

World

IMF says Italy faces 'monumental challenge'

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COMING UP:IMF says Italy faces 'monumental challenge'

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Transcript

00:00:00
>> Monumental. Not the building housing one of it's lease main banks, but the economic challenge facing the country according to the IMF. Italy's banks are, of course, a key part of that. They're collectively saddled with 360 billion Euros of bad loans. The problem's not a new one, but the halving of their share values after the Brexit vote is, and that made Italy an issue for finance ministers meeting in Brussels.
00:00:24
>> Yes there are issues of non performing loans with Italian banks but that’s not a new issue, it needs to be dealt with, it will have to be dealt with gradually. There will be no big solutions, I don’t think that’s possible for this kind of issue and it's not an acute crisis.
00:00:38
>> The Euro group president may have been playing down the risks but the IMF wasn't. It's revised down its growth forecasts predicting Italy will grow by less than 1% this year and only marginally faster in 2017.>> The level of debt in the Italian economy has consistently run north of 100% of GDP.
00:00:56
That hasn't changed, so I think Italy struggles from a lack of structural improvements. I think it's from a relatively weak political backdrop, although of course, mister Renzi is trying to adjust that, and that constitutional referendum in the next couple of months will be integral to that process.>> There are plenty of doubts about whether the Italian Prime Minister will succeed and even Britain's Central Bank Chief had a view on the issue.
00:01:18
>> The challenge is in Italy, the Italian banking system, again, are at the acute end of the spectrum in Europe, that's our judgment at this stage.>> Italians may see some irony in that. The latest crisis only became acute because British voters chose to leave the EU.