Italy’s prime minister, Giuseppe Conte, will address the Italian Parliament today on the issue of reforms to the European Stability
Italy’s prime minister, Giuseppe Conte, will address the Italian Parliament today on the issue of reforms to the European Stability Mechanism (ESM).
An agency under the EU, the ESM provides loans as financial assistance to eurozone countries struggling to pay off debts. The proposed changes would grant the ESM a wider mandate, giving the body greater monitoring powers over countries with large public—Rome has the second largest public debt to GDP ratio in the eurozone, behind only Athens. Reforms could also ease the restructuring of government debts, which could frighten investors and push bond yields higher.
In an attempt to reverse falling poll numbers, Foreign Minister and head of the ruling populist Five Star Movement (M5S) Luigi Di Maio has attacked the reforms with the help of a political enemy, Matteo Salvini, from the Eurosceptic, right-wing populist League. Though M5S currently rules with the centre-left, pro-EU Democratic Party—which supports the reforms—the row over the ESM could threaten the governing coalition that formed in September following the collapse of the M5S-League government. Though Brussels is set to vote on the changes by December 13, Conte is likely to ask for an extension to introduce amendments that are tolerable to M5S to keep the coalition intact.