|Silvio Berlusconi, the Italian PM, said that the measures were necessary to balance the budget by 2013 [Reuters]
Italy's government has approved austerity measures to balance the budget by 2013 and meet demands made by European Central Bank (ECB).
The measures were approved during an emergency cabinet meeting held late on Friday.
Despite denunciations by local government officials that cuts to social services would be unjust, the measures slash funding to regions and local governments by an estimated $14bn.
Local officials complained that the government has been cutting funds for transportation, health and welfare services for years.
The measures will also cut ministry budgets by $12bn and reportedly include a "solidarity tax" on high earners.
In total, government officials approved $64.12bn in cuts over the next two years.
"The austerity plan is not perfect but it's probably the best we could have hoped for in the current political situation with resistance from inside and outside the ruling coalition, and considering they had to re-formulate everything in a week,"said Chiara Corsa, an analyst with UniCredit in Milan.
'A necessary measure'
Protesters, shouting "thieves" and "shame on you", gathered outside Palazzo Chigi, where the meeting took place.
"How can a family manage with a thousand euros a month? The youngsters don't get married. How do the children eat?" protester Giulia Merli told Reuters news agency.
Silvio Berlusconi, the Italian prime minister, said that approving the measures was necessary to meet ECB demands to balance the budget by 2013 and implement structural reforms that will promote economic growth.
Berlusconi, who frequently boasts of "never putting his hand in the pockets of Italians", said he agreed to the tax increases only reluctantly and the decision made his "heart drip blood".
"We are personally very pained to have to adopt these measures," he told reporters after the cabinet had approved the plan.
On Thursday night, Italy - along with France, Spain and Belgium - imposed a temporary ban on the short-selling of financial shares. While the move appeared to calm market volatility, analysts disagree on whether it will leave a lasting impact on the nation's ailing economy.