Italy faces a material risk of being downgraded by Fitch Ratings by the end of the month although the government should be able to raise the funds it needs on debt markets, the agency's head of sovereign ratings said on Thursday.

There is clearly a material risk of a downgrade of Italy by the end of this month, Fitch's David Riley told Reuters in an interview. We are reviewing the situation. We're looking at the information and developments, so it's not a foregone conclusion ... but there is a significant risk that Italy could be downgraded.

He said that while the government could live with currently high borrowing costs for a couple of years, Fitch was not sure how long the economy can cope with high interest rates since those paid by business and consumers track those paid by the state.

We do actually think the Italian government will be able to fund itself but it's going to be expensive, he said.

(Reporting by Leigh Thomas; Editing by Ruth Pitchford)