Italian Premier Mario Monti scrapped Rome's bid for the 2020 Olympics on Tuesday, saying the country's government can't supply the required financial backing at a time of economic crisis.

Monti announced after a Cabinet meeting that it would be an irresponsible use of taxpayer money to fund the Olympic project with a guarantee that the government would cover any deficit.

"We arrived at this unanimous conclusion that the government didn't feel it was responsible to assume such a guarantee in Italy's current condition," Monti said. "We studied the plans with great care.

"Italy can and must have ambitious goals. Our government is focused also on its growth, not just on strictness, but at this time we don't think it would be fitting to commit Italy to this type of guarantee which could put at risk taxpayers' money."

The costs for hosting the Olympics in Rome had been estimated at $12.5 billion.

Government guarantee required

The decision came a day before the deadline for formal submission of bid files to the International Olympic Committee. The IOC requires government financial guarantees from bid cities.

"I'm very sorry because Rome's candidacy was serious, but I respect the decision of the government," Italian IOC member Franco Carraro said.

Rome's exit leaves five cities in the 2020 race: Madrid; Tokyo; Istanbul; Doha, Qatar; and Baku, Azerbaijan. The IOC will select the host city in 2013.

Italy's financial woes ended the country's hopes of landing its second summer Olympics following the 1960 Games in Rome.

Monti heads a government of technocrats charged with battling the country's economic ills. By scrapping Rome's bid for the Olympics, the premier gave an important message to the markets that Italy is serious in its pledge to cut its debt.