Italian Prime Minister Renzi to resign on Friday
December 07 2016 05:12 PM
Italy - Renzi
Italian Prime Minister Matteo Renzi speaks during a media conference after a referendum on constitutional reform at Chigi palace in Rome this week.

Reuters/Rome

* Renzi vowed to resign after losing referendum
* Head of state had asked him to stay until budget passed
* Consensus growing for elections next year


Italian Prime Minister Matteo Renzi will hand in his resignation on Friday, a parliamentary source said, as President Sergio Mattarella seeks to slow the pace of an unfolding political crisis.
Renzi vowed to resign in the early hours of Monday after a bruising referendum loss, but Mattarella, whose powers include naming prime ministers and dissolving parliament, asked him to stay on until the 2017 budget passes.
On Wednesday parliament approved the spending package in a confidence vote, clearing the way for the premier to step down. The reason Renzi's resignation has been pushed back until Friday was unclear.
Mattarella wants parliament to draft a new electoral law before any ballot is held, a source close to the president said on Tuesday, a move likely to delay any vote until spring.
Italy is not due to hold a parliamentary election before 2018 but there is growing consensus among party leaders to go to the polls a year early. Interior Minister Angelino Alfano, head of a small centre-right group, said the vote should take place in February.
Meanwhile, Italy is still looking for a way to prop up its debt-laden banks, especially struggling Monte dei Paschi di Siena, its third-biggest lender, which may require government involvement.
Two sources told Reuters on Tuesday that the government was preparing to take a €2bn controlling stake in Monte dei Paschi by purchasing junior bonds.
On Wednesday, a Treasury spokesman denied Italy was poised to ask for a loan from the European Stability Mechanism to support its banking sector.
Shares in Monte dei Paschi were up about 9% at 1330 GMT while Italy's benchmark 10-year bond yield fell to near three-week lows.
Later on Wednesday, Renzi will speak at a meeting of his Democratic Party's (PD) top brass. Renzi is still leader of the PD, which has the largest number of parliamentarians, so it is unlikely any new government could be formed without his backing.
The PD plans to support a government of national unity, which would have to include parties currently in opposition, two party sources said on Tuesday. If such a government is not possible, then the PD wants an early election, they said.
Infrastructure Minister Graziano Delrio, a PD member and close ally of Renzi, said on Tuesday the best solution would be for an interim government to be put in place to quickly change the electoral law so an election could be held "in the spring".



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