Italy's public debt last year climbed from 103.8% of GDP in 2004 to 106.4%, the greatest hike since 1994, a report from the Bank of Italy said on Thursday.
The central bank observed that it was essential for Italy to embark on an economic policy which allows for a constant and stable reduction of the debt. The bank's bulletin forecast that 2006 will see GDP rise by just over 1%, on the condition it expands by a rate of 1.5% in the first quarter.
Italy's slow economic growth over the past ten years, the central bank said, was due more to structural problems than global economic cycles and these shortcomings kept Italy from taking the best advantage from positive economic trends.
Public spending needed to be cut this year in real terms by some 1%, the Bank of Italy observed.
On employment, the bank's report said that 2005 saw the first decline in full-time jobs since 1995, down 0.4%, while the overall number of people holding jobs rose by 0.2%. One of the reasons for this was that one out of two people under 30 being hired was offered only term contracts or temporary jobs.
