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Italy plans gradual liberalization to boost economy

Italy's Industry Minister Corrado Passera attends the 4th annual New World conference in Paris
Italy's Industry Minister Corrado Passera attends the 4th annual New World conference in Paris

By Catherine Hornby

ROME (Reuters) - Italy plans gradual liberalizations in sectors ranging from energy to professional services to revive its ailing economy, the industry minister said on Sunday, ahead of meetings with European partners to discuss ways to stem the debt crisis.

The liberalizations, which include moves to boost competition and relax some regulation in the euro zone's third largest economy, will be included in a new set of growth-enhancing reforms due to follow the 33 billion euro austerity plan passed last month.

"We will proceed in every sector: gas, energy, commerce, transport, the professions. Each step will go towards creating more sustainable growth," Industry Minister Corrado Passera said in an interview with the Corriere Della Sera daily.

He said the measures would be introduced gradually each month and would be accompanied by reforms to open up markets and fight unfair advantages.

Italy has been at the centre of the debt crisis since last summer when its borrowing costs began to approach the levels which forced Ireland, Greece and Portugal to seek an international bailout.

As it faces a recession this year which will make it even more difficult to rein in public debt, the government led by Prime Minister Mario Monti is drawing up a set of "Grow Italy" measures aimed at making the sluggish economy more competitive.

Monti, a respected technocrat, is seeking a united response from euro zone countries to the bloc's debt crisis and aims to coordinate growth strategies. He has been warmly embraced by the French and German leaders since he took over from Silvio Berlusconi in November.

ECB ROLE

On Wednesday Monti heads to Berlin for talks with Germany's Chancellor Angela Merkel, and is set to meet Merkel and French President Nicolas Sarkozy again in Rome on January 20.

Italy will be pushing for greater powers for the European Central Bank in guaranteeing liquidity and stability, Passera told the paper on Sunday.

Germany has opposed calls for a greater role for the ECB to help solve the debt crisis, saying political action is needed to resolve the situation.

Monti wants to strengthen the single market to boost growth at the European level and fund Europe-wide infrastructure development through project bonds to improve transport links and communication, Il Sole 24 Ore daily reported on Sunday.

The prime minister said on Saturday that new Italian liberalization measures would be aimed at unblocking bottlenecks which hamper the economy and encouraging fair competition.

Italy's antitrust authority has unveiled a list of proposals for liberalizing the economy including spinning off the postal bank from the main postal operator, privatizing some local services and favoring the development of independent operators in the energy sector.

The government's growth-boosting measures are also set to include a reform of Italian labor contracts though they face a struggle with unions who have already criticized the austerity plan for weighing heavily on ordinary workers and pensioners.

Monti is also stepping up the fight against tax evasion, which robs the Italian exchequer of an estimated 120 billion euros a year, nearly four times the value of his austerity budget.

(Reporting By Catherine Hornby, editing by Rosalind Russell)

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