DEBT FINANCING. Crucial austerity package Italy enters the final stretch

Rome (Reuters)-Italy's often revised package of 54 billion austerity enters the final stretch on Monday, when the cuts designed to balance the budget by 2013 will go before the lower House of Parliament, with due approval later in the week.
The package, which was approved by the Senate last week, goes to the Chamber of Deputies, as economy Minister Giulio Tremonti prepares to unveil new measures to promote growth.
The program goes to the lower House includes a 1% increase in value-added tax, pension adjustment rules and a special contribution of 3% on incomes over € 300,000 ($ 422,000), as well as cuts in government spending.
However, struggles between different factions and clear divisions between Tremonti and Prime Minister Silvio Berlusconi led to the package being chopped and changed so frequently that its credibility was badly damaged.
Italy, the third largest economy in the euro zone has moved firmly to the center of the crisis in the past two months as turbulent coalition of centre-right Berlusconi has dithered on measures to stimulate growth and reduce its huge debt pile.
Last week, Italian bond yields, which have been contained by intervention of the European Central Bank last month, spiked sharply after ECB Board Member Juergen Stark resigned over his opposition to the policy.
The ECB's purchase of Italian obligations has been the only thing preventing the spiral out of control, as doubts the market has grown over whether Italy can keep control of your debt pile of 1.9 trillion euros of borrowing costs in Rome.
The ECB has demanded that Rome take urgent action to cut a pile of debt equivalent to 120 percent of gross domestic product, second only to Greece in the euro zone.
In an attempt to show his will, the Cabinet also came out in a planned constitutional amendment that would bind Governments to balanced budgets running from 2014 onwards unless an exception was sanctioned by a vote in Parliament.
But the amendment, which would prevent governments run a deficit, is largely symbolic for now, because it probably would take years to implement.
PLANS TO STIMULATE GROWTH
Most are imminent plans by Tremonti introduce measures to promote growth after the austerity package becomes law.
According to the press, the plans for promoting growth includes revenue from the auctions of new licenses for the fourth generation broadband internet and incentives for investments in the South, where unemployment is higher than in the rest of the country.
They also include plans to use more European Union funds to help growth.
The debt crisis led to more calls for Berlusconi to resign for the good of the country.
Emma Marcegaglia, head of the employers ' Federation Confindustria, made a suggestion pointed out that the Government should depart could address problems that were putting the future of Italy at risk.
Pierferdinando Casini, leader of the small opposition party UDC, called Berlusconi to resign and make way for a Government of national unity to lead the country until the next scheduled national election in 2013.
Berlusconi and his key aides rejected both calls, saying that the Government would remain in Office until the end of the legislature, as planned.
Berlusconi faces fresh charges connected with a prostitution scandal two years ago.
Magistrates in Naples has been investigating allegations that he paid around 750,000 euros to a southern Italian businessman to hush up a case of prostitution goes back to 2009, adding an extra distraction to attempts to address the debt crisis.
He is not accused of any wrongdoing in the case, that the magistrates are treating as a case of extortion, but runs the risk of damaging his already permanent assaulted as potentially embarrassing revelations appear in the press.
Berlusconi had been due to be questioned by magistrates as a witness on Tuesday, but prosecutors said that he will not be able to make the appointment because he has to go to Brussels for a meeting of the EU.

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