Naples and Palermo among 10 Italian cities going broke as pressure grows on Europe’s third-largest economy

Monday, July 23, 2012
By Paul Martin

By Phil Vinter
23 July 2012

Italy’s economic woes refuse to go away with ten cities including Naples and Palermo reportedly struggling to manage their own finances.

The country has taken steps to try and sure up its economy on a national level in recent weeks, but the report by daily newspaper La Stampa today highlights growing concerns about the state of local finances.

According to the newspaper unnamed government specialists say the euro zone’s third largest economy is under severe stress at a regional level.

Last week Prime Minister Mario Monti raised concerns that the autonomous area of Sicily was on the cusp of defaulting on its debt.
The news comes in the wake of Spanish reports that six regional authorities are on the brink of following the Vatican’s request for financial aid, as they struggle to keep afloat.
In Italy local level funding issues do not add to the country’s 2trillion euro public debt, but they highlight the fact that the economic crisis is not solely biting at a national level.

La Stampa said a provision in the government’s spending review obliging municipal authorities to make a 25 per cent cut in the book value of certain assets had revealed big holes in municipal accounts.

The assets in question include anticipated revenues from sources such as fines or waste management taxes, often over-estimated in budget plans by authorities that know they cannot expect to collect all of the projected funds.

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