MNI INTERVIEW: Italy Needs Wide Coalition Govt With 5SM: Renzi

--Early Vote "A Disaster", Budget Law Still Possible

--Working On Proposals To Avoid VAT Spike, Boost Economy

By Silvia Marchetti

     ROME (MNI) - Italy must find a stable coalition government, fully supported

by the 5 Star Movement, that will last for the remaining four years of the

current electoral cycle, former Prime Minister and current Democratic Party

senator Matteo Renzi told MNI in an interview.

     "As a former prime minister, I have made an institutional appeal to all

parties" for the sake of the country, he said.

     According to Renzi, it would be "a disaster to push Italy to an early vote

in autumn, with very severe consequences for the Italian economy" saying he will

soon lay out a package of pro-growth measures aimed at avoiding a VAT hike in

2020.

     --NEW COALITION

     As far as building a new coalition government goes, Renzi says he is "open

to all solutions", including teaming up with his long-time foes in the 5 Star

Movement, currently the senior partner in the coalition government, to prevent a

snap election and block the rise of the League party.

     Any possible coalition government could see the Democratic Party join

forces not only with the 5SM, but with the minor centre-left groups that

abandoned Renzi in 2017 following the constitutional referendum that caused his

demise.

     According to Renzi, who governed in 2014-2016, creating a transition

government just for the sake of an early vote would be pointless and there

should be an attempt to form a new "government, supported by a wide

parliamentary majority, fully able to exercise its functions", with a clear

mandate and able to prevent 'no budget', he said.

     A sound budget draft including fiscal targets and key measures for next

year would be possible, with a first draft ready by October to forward to

Brussels for an initial green light.

     That would hopefully allow the Budget to be passed by Parliament before the

end of the year, avoiding emergency measures that will need to find E23 billion

in savings or revenue increases to avoid a forced VAT hike, a risk Renzi

believes Italy can't afford to run.

     --FRESH BUDGET PROPOSALS

     Renzi stressed he would present "a series of proposals" for next year's

budget in coming days,

     Put together with former Economy Minister Pier Carlo Padoan, now a Democrat

Lower House deputy and a team of experts. The proposals would aim to boost

growth and prevent the VAT hike.

     The former PM argued that only a stable coalition government with a

credible program and near full-term would be able to achieve the needed

budgetary goals.

     "If the budget law doesn't chase unrealistic electoral proposals, like the

(League's) flat tax, Italy will have no problem at all in defining a fiscal plan

that can avoid the VAT spike and relaunch the economy which is tackling a

recession" thanks to the populist government, he said.

     Renzi stressed that any decision over the next steps to exit Italy's

political crisis was in the hands of president Sergio Mattarella, who would vet

in coming days whether there are grounds for a governing majority alternative to

the collapsing 5SM-League coalition.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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