Italian President Asks Former IMF Official to Try to Form a Government

Italian President Asks Former IMF Official to Try to Form a Government

Italian President Asks Former IMF Official to Try to Form a Government

News reports said Sergio Mattarella would convene the former International Monetary Fund official Carlo Cottarelli to the presidential palace later on Monday and ask him to form a technical government that can lead Italy until a new election.

The choice of Cottarelli, known for his strict approach to state finances, is set to further inflame Italy's bitter political divisions after populist leaders slammed the president for the collapse of their planned government and sought to extend the blame to the European Union.

The euro was seen to have received a mild lift after Italian President Sergio Mattarella on Sunday rejected Paolo Savona, a vocal critic of the single currency, as the economy minister.

The leader of Italy's far-right League Matteo Salvini on Monday dismissed talk about a possible impeachment of the country's president and said he wanted to change the electoral law with the 5-Star Movement. "If we want to discuss it, then we should do so in a serious fashion".

"Mr Mattarella's refusal on Sunday to approve a proposed eurosceptic economic minister gave the euro a much-needed push", said Hussein Sayed, chief market strategist at FXTM. 5-Star had waged an independent campaign at inconclusive March 4 elections, while the League campaigned as part of a coalition of right-wing parties.

Financial markets tumbled last week on fears the Five Star-League coalition would unleash a spending splurge and dangerously ramp up Italy's already huge debt, which is equivalent to more than 1.3 times the nation's domestic output. Mattarella added: "Now some political forces are asking me to hold elections".

"If there's not the OK of Berlin, Paris or Brussels, a government can not be formed in Italy".

European stocks were slightly higher Monday morning, as investors monitored signs of thawing tensions between the USA and North Korea and reacted to renewed political turmoil in Italy.

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Five-Star leader Luigi Di Maio called on parliament to impeach the mild-mannered Mattarella.

Such a solution could only be short term, as most members of parliament have said they would not support such a government.

The move created a new round of political uncertainty in a country long used to political turnover and paved the way for an early election likely within months.

But the prospect of a neutral government ignited a backlash among the two populist parties, who are view it as yet another move by special interests to control Italy against the will of the people.

The question is whether he'll be able to get parliamentary approval, since the League and M5S between them have a majority in both Italy's houses of parliament.

Article 90 of the Italian constitution foresees recourse to impeachment only in two cases: high treason and an attack on the constitution itself, which Di Maio has said could be invoked in the present case.

The incumbent president has been supported by head of the center-right Forza Italia party, former Italian Prime Minister Silvio Berlusconi, as well as the Democratic Party.

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