ROME - Italy's cabinet on Thursday pledged to raise 8 billion euros over the next three years to rebuild the earthquake city of L'Aquila, without raising taxes or creating a hole in public accounts.
Prime Minister Silvio Berlusconi and Economy Minister Giulio Tremonti said at a news conference the money would come from European Union funds, domestic contingency funds and from re-directing financing from other projects.
However they offered little to satisfy economists who have complained of a lack of detail in the government's financial commitments in the wake of the earthquake which killed 296 people earlier this month.
It's not necessary to create a hole in the accounts, it's sufficient to re-direct lots of existing spending items, Tremonti said.
Tito Boeri, economics professor at Milan's Bocconi University, told Reuters this week that Berlusconi's strategy in the wake of the disaster relied on promises based on extreme vagueness and lack of transparency.
Tremonti admitted the government still did not know how much was needed for reconstruction and said when it had an estimate it would request a solidarity contribution from the EU.
He said the government would crack down on illegal betting, which would boost revenues raised by official state lotteries.
If more than the initial 8 billion euros were necessary it would be found by combating international tax evasion, possibly as part of a concerted EU approach, he said.
Berlusconi said 500 million euros needed by the autumn to house thousands of people made homeless by the quake would also come from the EU.
Italy's public finances are already creaking under the weight of its worst recession since World War Two.
The International Monetary Fund forecast on Wednesday that the budget deficit would jump to 5.4 percent of gross domestic product this year, far above the European Union's 3 percent ceiling, and rise to 5.9 percent in 2010.
Italy's massive debt, the highest in the euro zone, is seen rising from 105.8 percent of GDP last year to 115.5 percent this year and 121.1 percent in 2010.
The government, which still has an official deficit target of just 3.7 percent this year, is due to update its public finance goals in the next few days.
Berlusconi focused on the positive at Thursday's news conference after the cabinet approved the 8 billion euro decree.
For the first time the response to events like the earthquake does not involve higher taxes, he said.