ITALY – The International Monetary Fund has welcomed Italy’s proposed pension reforms, but is urging the government to ensure full implementation.

Following a consultation with Italy regarding financial stability and growth, the executive board of the IMF welcomed the recent pension reform proposal. Carlo Cottarelli, IMF’s mission chief to Italy, described it as the “the most important step forward that has been announced by the government”.

“We regard the proposed amendments sent by the government to Parliament as important steps in raising the effective retirement age and in moderating the spending pressure on the pension system in the coming decades and, of course, in supporting the gradual decline in the public debt to GDP ratio,” says Cottarelli.

He adds that it is critical that the “effectiveness of these reforms, in moderating the growth of pension spending is not reduced during the parliamentary debate”.

The report says that the directors “urge the authorities to work toward expeditious and full implementation of the reform”.

The recommendation by the IMF to the Italian government to stand firm will no doubt provide some encouragement. The proposals have not been welcomed by many of Italian unions, which staged nationwide protests in October, and threats for further protests have already been made.

As part of the pensions reform, it is proposed to increase the retirement age by five years, and to introduce incentives to encourage employees to increase their working life.