Italy’s Renzi resignation frozen until after budget

ROME

Italian Prime Minister Matteo Renzi formally resigned Dec. 5 after a crushing referendum defeat that has sent shockwaves around Europe - though his departure will be delayed by a final task, passing a budget.

Renzi handed his resignation to President Sergio Mattarella after Italians resoundingly rejected his constitutional reform proposals in the Dec. 4 referendum, to the delight of the country’s populist leaders, fresh after Brexit and Donald Trump’s U.S. victory.

The departure of the center-left premier - who had staked his future on the outcome of the vote - plunges Italy into political uncertainty and casts a shadow over the future of the eurozone’s third-largest economy.

In an apparent bid to ease investor fears, the presidency said in a statement that Mattarella had “asked the prime minister to postpone his resignation” until the 2017 budget has been passed, a move expected by the end of the week, according to Italian media.

The government has already won a vote of confidence on the budget in the lower house of parliament.
Renzi, who in 2014 became Italy’s youngest-ever premier, was left with no option but to quit after his proposals to streamline parliament were rejected by voters by a decisive 59-41 percent margin.

The 41-year-old former mayor of Florence, who came to power promising radical reform, defended his record.
“1,000 difficult but wonderful days. Thanks to everyone. Viva l’Italia,” he wrote on Facebook.

Italian media said he told his cabinet he had agreed to see the budget passed before his departure “out of a sense of responsibility.”

Meanwhile, measures to allow state aid for Banca Monte dei Paschi di Siena are ready, with the Italian lender’s hopes of pulling off a privately-backed fundraising fading, three sources familiar with the matter said on Dec. 6, according to Reuters. 

The Tuscan bank is looking to raise 5 billion euros ($5.4 billion) this month to avoid being wound down, but investors are reluctant to commit funds after Renzi lost the referendum, triggering political uncertainty.

One source said the bank was looking at the idea of a so-called precautionary recapitalization, which would involve the government injecting cash. 

Two other sources said a government decree authorizing the state recapitalization was ready, with its implementation depending on political developments in the next few days.