Italian Prime Minister Silvio Berlusconi voiced defiance ahead of a critical parliament vote on Tuesday, as Europe pressured Italy to implement long-promised economic reforms to avert a debt blow-up.
Lawmakers were expected to gather at 1500 GMT to vote on approving the 2010 budget -- a usually procedural motion that has taken on extra significance in the current turmoil following a rebellion by some Berlusconi supporters.
The European Union's Economic Affairs Commissioner Olli Rehn has said he wants answers from Italy on its reform plans by the end of the week and a first group of EU monitoring experts is expected in Italy on Tuesday or Wednesday.
"It is essential now that Italy will stick to its fiscal targets, ensure their implementation and intensify the structural reforms that can boost growth," Rehn said on Monday as eurozone finance ministers met in Brussels.
Italy has been on the ropes since last week when the government agreed to special surveillance from the International Monetary Fund and the European Union to ensure it was meeting crucial targets to cut its massive debt.
The combination of Italy's low growth rate and 1.9-trillion euro ($2.6-trillion) debt has fanned investor fears that Italy could be the next to fall in Europe's debt crisis even though its deficit is relatively low.
Officials point out that Italy, the eurozone's third largest economy, is not comparable to Greece but borrowing rates have risen inexorably, with the yield on 10-year government bonds hitting a record 6.676 percent on Monday.
"We will move forward. We have to be ready to fight," the 75-year-old Berlusconi said in a characteristically defiant message posted on Facebook on Monday after a rumour of his imminent demise triggered a stock market rally.
He dismissed talk of his possible resignation as "baseless" and warned against calls for the creation of a national unity government including his leftist opponents, saying that it would be "the opposite of democracy."
In a stark message to doubters from his own ranks, Berlusconi also told the newspaper Libero: "I want to look anyone who tries to betray me in the eyes."
"I am sure that tomorrow we will have a majority to carry out the reforms that Europe is asking for and that are needed to boost the economy," he said.
While the coalition between Berlusconi's People of Freedom (PDL) party and the Northern League could win Tuesday's vote and an imminent confidence vote in the upper house of parliament, its position has been severely weakened.
Analysts say it no longer has a 316-vote majority in the lower house and Berlusconi loyalists have called for a widening of the coalition, while the Northern League has said it favours early elections as a way out.
Although the current political picture in Italy is far from clear, the idea that Berlusconi -- a dominant feature in Italian politics for almost two decades -- could step down is no longer taboo, including among his supporters.
Berlusconi's popularity rating has slumped to a record low of 22 percent amid the current crisis and he is currently a defendant in three trials for bribery, tax fraud, abuse of power and paying for sex with a 17-year-old girl.