Italy's public debt hit an all-time high in June of almost 2 trillion euros and the annual budget deficit was also bigger than a year before, due largely to Italy's share of bailouts for other euro zone states, the central bank said on Monday.
Public debt at the end of June rose 6.6 billion euros to 1.973 billion euros, the Bank of Italy said, as the Treasury's cash reserves increased by 10.3 billion euros.
Italy's benchmark bond yields remain close to 6 percent despite tough austerity measures introduced by Mario Monti's technocrat government.
With the country mired in a deep recession, markets are sceptical of Italy's ability to bring down a debt pile equivalent to around 123 percent of output, the second highest debt in the euro zone after Greece's.
The economy contracted 0.7 percent in the second quarter and gross domestic product was down 2.5 percent from a year earlier.
In another worrying sign for public finances, the Bank of Italy reported that in the first half of the year the annual budget deficit, at 47.7 billion euros, was 1.1 billion euros higher than in the same period of 2011.
This was due to an increase in spending to help other euro zone countries, which rose to 16.6 billion euros from 6.1 billion in January-June 2011.
Italy itself is under pressure to request help from Europe's bailout funds, a move now widely seen as the only way to bring down borrowing costs that have soared in recent months, but which the government has so far resisted.
Italy's one-year borrowing costs rose marginally at auction on Monday, with uncertainty over how and when the European Central Bank might move to ease both the country's and the region's mounting debt problems tempering appetite for risk.
Rome is targeting the deficit to fall sharply this year to 1.7 percent of GDP from 3.9 percent in 2011, but Economy Minister Vittorio Grilli admitted on Sunday that this target would be missed.
He nevertheless reiterated Rome's position that because the overshoot was due to the steep recession, no further austerity measures were needed.
The structural deficit, the fiscal gap that persists even when an economy is operating at its full potential, would be eliminated next year as targeted, he told Rome daily Repubblica.
Grilli asked the European Central Bank to move more quickly to put together plans to bring down Italy's yields and said no new policy conditions should be imposed on Italy.
He said when the recession is over, Italy could lower its debt-to-GDP ratio by 20 percentage points in five years through a combination of real estate sales, spending cuts and prudent budget management.