MNI EXCLUSIVE: Renzi To Maintain Coalition As Virus Hits Italy

By Silvia Marchetti

     ROME(MNI) - Italy's former premier Matteo Renzi will maintain his support

for the country's governing coalition despite speculation he could trigger early

elections, as the threat of coronavirus makes it still more crucial to avoid

early elections and smooth over policy clashes, sources at Renzi's Italia Viva

party told MNI.

     Concern over the coalition's future mounted last week when Renzi said he

would back a no-confidence vote in the government if it pressed ahead with plans

to limit the use of the statute of limitations in criminal trials. Without

Italia Viva, the coalition between the much larger 5-Star Movement and

Democratic Party might not be able to survive.

     But the coronavirus emergency, with Italy seeing the highest number of

victims in Europe, is lowering political tensions, according to the sources at

Italia Viva and a source at 5-Star. Governing parties would also fear that early

elections would open the door to government by the far-right League, currently

leading in opinion polls.

     Despite their differences, there is room for compromise between Renzi and

Prime Minister Giuseppe Conte, who are set to meet this week, possibly as early

as on Tuesday, the Italia Viva sources said, noting room for agreement on areas

including infrastructure spending and fiscal reform.

     "There are many points of convergence between our program and what Conte is

working on for his Agenda 2023, nobody wants to trigger a political crisis or an

early vote, especially now in the wake of the coronavirus emergency. So there's

no reason to believe a deal will not be struck", said a top Italia Viva source

who is a close adviser to Renzi.

     --INCOME TAX CUTS

     Last week, Renzi launched his EUR120 billion so-called 'Italia Shock'

programme, including proposals to cut red tape, particularly for strategic

infrastructure investments. Many of these are likely to be in harmony with

Conte's Agenda 2023, which focusses on welfare and sustainable development,

according to Democratic Party sources.

     Another point of convergence between Conte and Renzi is a proposed cut in

income taxes, said the Italia Viva official.

     "We're working well with the Treasury on this reform but it makes little

sense if the tax cuts will be in the range of just EUR3-6 billion," said the

official. "We need a comprehensive tax overhaul with greater impact."

     The governing parties will soon start drafting the next budget plan which

will set out fiscal stimulus for the next three years. Updated fiscal targets

are due in April.

     A potential deal over the statute of limitations proposals could see

incentives for judges and courts to conclude trials quickly, the sources said.

     Renzi has also called for changes to the basic income provided to poorer

families, one of 5-Star's flagship policies. Italia Viva says the payment, of

about EUR700 a month, is inefficient, with only 1.7% of recipients eventually

finding jobs, and that the official focus should be more on providing assistance

to low-income families via policies such as the "social inclusion income"

introduced by a previous Democratic government.

     "The virus epidemic calls for responsibility from both sides," another

Italia Viva source said, although noting that "finding a compromise depends on

what Conte will do and how much he is prepared to incorporate into his agenda of

Renzi's proposals."

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

[TOPICS: MFIBU$,M$E$$$,M$I$$$,M$X$$$,MC$$$$,MT$$$$,MX$$$$]