ITALY’S new economy minister said a planned sale of public assets could raise enough money to help bring down the country’s huge public debt by 20 percent in five years, according to newspaper Corriere della Sera yesterday.

In his first interview since being appointed to the job, Vittorio Grilli told the newspaper that the best way to go about it would be to sell between 15 billion euros (US$18.36 billion) and 20 billion euros worth of assets a year, equivalent to 1 percent of the country’s gross domestic product.

“If you consider that we already have a public surplus, before interest payments on the debt, of 5 percent, and you calculate a nominal growth of 3 percent, stripping away inflation of 1 percent, that would lead to reducing it [the debt] by 20 percent in five years,” the newspaper quoted Grilli saying.

Grilli, who was sworn in July 11 after serving as deputy minister, said the government, which is imposing a series of measures to shore up the country’s public finances, could have difficulty selling off assets, especially real estate, because their quality is not as good as those sold 20 years ago.

Italy has a public debt of 1.95 trillion euros, equivalent to 123 percent of its GDP, a source of concern for investors as the country’s technocratic government struggles to prevent Italy from falling further victim to the sovereign debt crisis.

Moody’s has downgraded Italy’s debt to Baa2 from A3 and given it a negative outlook, saying only a sharp cut to the debt load would trigger an upgrade.

The downgrade raised the ire of Italian business and political leaders Friday. They accused the U.S.-based ratings agency of failing to recognize the efforts of Prime Minister Mario Monti’s government to fight tax evasion, cut public spending and raise taxes.

“A balanced budget is at hand, the structural reforms are under way. No other country has done so much in such a short period of time,” Grilli said.

Grilli said foreign investors own about 40 percent of Italy’s public debt, adding that it was “too soon to say” whether they would return to buy more of it.

Although Moody’s downgrade prompted the spread between Italian 10-year bonds and the German bund to rise Friday, an auction of 5.25 billion euros worth of three-year bonds by the country’s Treasury met ample demand.

Grilli said he hopes the government won’t have to raise a value-added tax all the way to 23 percent, as has been scheduled for next year.

He also hopes the labor taxes will go down as the government raises more money from the fight against tax evasion, which he expects to bring more than 10 billion euros to public coffers this year.

As for the expected decline in gross domestic product this year, Grilli sees the contraction at slightly less than 2 percent — a more optimistic forecast than that made by others including Giorgio Squinzi, the head of industrial lobby group Confindustria, which sees a contraction of more than 2 percent. (SD-Agencies)