An exchange traded fund tied to Italy could see a bumpy ride after the government announced further austerity measures in response to Europe’s debt crisis.

The iShares MSCI Italy Index (NYSEArca: EWIis in focus amid the latest drama that the Italian government faces.

Prime Minister Silvio Berlusconi announced plans to revamp the government’s $65.4 billion austerity package, according to a report. His plan includes a reduction of local government, while many Italians will have to put off retirement, report Stacy Meichtry and Giada Zampano for The Wall Street Journal. [Europe ETFs Fall Short as Short Selling Ban Extended]

“It looks complicated. We’ll have to see where the real spending cuts will come from,” said Francesco Giavazzi, professor of economics at Bocconi University in Milan, in the report. [The Contrarian: Single-Country ETFs]

This is the third time the Italian government has proposed an austerity package which is causing analysts to question if the government means what it is saying. The austerity plan introduced earlier this month has been scrapped.

Rome has a debt accounting for 120% of the domestic GDP. In turn, the bond market has been drained by investors, causing the ECB to step in and buy up the debt to keep the country from default.

The latest plan includes a mix of stricter tax collection measures, a reduction of tax breaks for cooperatives, and an overhaul of the pension rules that an Italian citizen will have to work for 40 years to be eligible for retirement.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.