Italian president summons former IMF official to form caretaker government, as populists prepare for fresh elections

Written by on May 28, 2018

After populist government talks in Italy dramatically collapsed Sunday forcing the resignation of prime minister-in-waiting Giuseppe Conte, president Sergio Mattarella on Monday summoned a high-profile economist to discuss forming a caretaker government.

Government negotiations, which were deadlocked over the proposed appointment of a controversial eurosceptic finance minister, fell apart after Mr Mattarella invoked his constitutional right to refuse the coalition’s choice, and the populist parties refused to appoint anyone else, leaving talks in tatters.

Economist Carlo Cottarelli, 64, was expected at the presidential palace late on Monday morning.

Mr Cottarelli, 64, is originally from Cremona and has a master’s degree from the London School of Economics and past appointments in the Bank of Italy and International Monetary Fund, where he once served as head of the IMF delegation for Italy and the UK.

In 2013, he was appointed by the government of Enrico Letta to review Italian public sector spending – his detailed suggestions for cuts even included reducing the lighting of motorways and empty industrial lots.

In his latest book released this year (titled “The Seven Capital Sins of the Italian Economy”) he argued it was preferable to reform the Italian economy in a way that expands growth rather than take a plunge into darkness with an exit from the euro.

Far-right League leader Matteo Salvini, whose popularity has risen in the 83 days of deadlock, stands poised to gain most from fresh elections.

Thus far he has been silent on the question of impeachment, but did not rule out a coalition with Five-Star Movement in any new electoral season.

“Italy is not a colony,” Mr Salvini said. “We are not slaves of the Germans, the French or the spread or finance. Italians first . . . I am not giving up.”

The markets, however, breathed a sigh of relief at the latest developments, with the Milan stock market rising sharply early Monday, and an uptick in Italian government bond market and the euro.

“Mattarella has made it clear that he will not allow any policy that could put Italy on a slippery slope towards a major confrontation with the EU that could potentially jeopardise Italy’s euro membership,” said Holger Schmieding, an analyst with Berenberg.

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