IMF tells Italy to cut its public deficit

Maintaining financial-sector stability is a priority says the international financial organisation.

The International Monetary Fund (IMF) has told Italy that it needs to take "decisive steps" to address its budget deficits, including massive reductions in public spending.

This follows several days where fears about the Italian economy and the stability of the eurozone more generally have spread through the international markets and media.

On Tuesday, Italy's share price fell by 4% at one point before recovering by 1.2% later that day. The country's debts currently stand at more than 120% of Italy's annual economic output.

The Italian government is responding to recent events by advancing its austerity budget, with Finance Minister Giulio Tremonti proposing budget cuts of 48bn euros (£42bn) over the next three years.