Fitch Ratings on Thursday affirmed Italy's credit rating at 'A-' with a 'negative' outlook, citing recent and prospective structural reforms that would enhance the growth potential of the economy.

The short-term foreign currency rating is affirmed at 'F2' and the country ceiling at 'AAA'.

"Fitch recognises recent reform to the labour market and measures to render the economy more flexible," the agency said in a report.

According to the report, the affirmation also reflected the demonstrated commitment of the government to reducing the budget deficit and public debt, as well as Parliament's adoption of a balanced budget amendment to the Constitution and ratification of the Fiscal Compact.

Fitch said that the government's four fiscal packages, the most recent announced in early July, over the last year and equivalent to 5 percent of GDP should be sufficient to reduce the budget deficit below 3 percent of GDP this year to place public debt on a downward path from 2013.

Fitch's current judgment is that in the absence of adverse shocks, the Italian Treasury will retain access to market funding, albeit at a relatively high cost.

The agency, meanwhile, warned that "further significant and prolonged increases in the cost of market borrowing that did not prompt an effective European policy response would likely result in a downgrade because of the adverse consequences for public debt dynamics."

RTTNews