ROME -- Rome dropped its bid for the 2020 Olympics on Tuesday after Premier Mario Monti said the Italian government would not provide financial backing for an estimated $12.5-billion project 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 Olympics 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 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.
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.
Italy's government has tried to reassure financial markets that its serious about cutting public spending and reviving the country's sluggish economy by passing a series of austerity and growth measures. The efforts appear to be working in the short term, with Italy's borrowing costs dropping in recent weeks.
Monti was installed late last year after the resignation of Premier Silvio Berlusconi, who struggled with sex scandals and a loss of confidence to push through necessary financial reforms.
By scrapping Rome's bid for the Olympics, Monti gave an important message to the markets that Italy is serious in its pledge to cut its debt.
Gianni Petrucci, president of national Olympic body CONI, understood the need for cuts, but hoped there was room for the games.
"Monti has told us no, it's a great sadness," Petrucci said. "It's a dream that has vanished after two years of hard work, the bid was a serious one. You need to cut and think about investments, and the Olympics are a future investment."
The bid was considered Italy's best chance of hosting the Olympics because postponing the candidacy until 2024 would put it against possible bids from the United States, France and South Africa.
"We spent hours talking, but (Monti) was unshakable on the subject of the accounts linked to the general economic situation," bid chairman and IOC Vice President Mario Pescante said. "We have to resign ourselves to the fact that for at least 10 more years, we won't talk anymore about having the games in Italy."
Madrid and Baku submitted their bid files to the IOC on Tuesday, a day after Tokyo and Doha delivered their documents. Istanbul will do so on Wednesday.
Madrid is bidding for a third consecutive time despite Spain's severe financial downturn.
"It's a tough moment for Spain due to the economy," bid leader Alejandro Blanco said Tuesday. "But in these moments of crisis there are two solutions: Hide or say 'Here I am presenting the bid because I think it is good for the city and for the country and because we can offer a games what will be among the greatest ever."
Sixty leading Italian athletes -- including soccer star Francesco Totti, as well as Olympic canoer Antonio Rossi and Alpine skier Deborah Compagnoni -- had signed an appeal urging Monti to back the bid.
However, former 200-meter world record holder Pietro Mennea applauded the government's decision.
"The Olympics won't go away. We can bid again in a few years," Mennea said.
AP Sports Writers Stephen Wilson in London and Paul Logothetis in Madrid contributed to this report.