Sinking Lira Putting Italians in the Soup

SEEKING to rescue the sinking lira, Prime Minister Lamberto Dini warned lawmakers this week that opposition to his deficit-cutting plans could plunge Italy onto ``an irreversible and devastating financial crisis.''

``When the house is burning, you can't wait for months to put out the fire,'' Mr. Dini told the Senate Budget Commission.

The Italian currency has plummeted to record lows against the German mark because of fears that lawmakers may try to water down or block Dini's plans, which rely heavily on tax increases.

The lira rebounded slightly Tuesday after Dini's address. He also got a boost when the leader of the right-wing National Alliance, Gianfranco Fini, promised not to try to bring down the government over the package.

THE lira was at 1,135 to one deutsche mark in late European trading, compared with 1,143.09 to the mark on Monday.

A Senate vote on Dini's economic measures may come later this week. If it passes, the bill then moves to the lower house of parliament.

Shrinking Italy's $100 billion deficit is the main goal of Dini's month-old government, Italy's 54th since 1945. But former Premier Silvio Berlusconi has demanded elections this spring and has suggested his Forza Italia party could raise obstacles to the economic proposals.