MNI SOURCES: Italy's 5-Star May Approve EU's ESM Reform

Italy's parliament is likely to finally vote to approve a long-delayed overhaul of the European Stability Mechanism in the next few weeks as the Five-Star Movement which has held it up drops its opposition, sources in the populist group and the Italian government told MNI.

But the ESM reform, which is vital for an early launch of a backstop for the eurozone's Single Resolution Fund, designed to deal with failing banks, remains a "delicate topic" for Five-Star, the sources said. The movement is not about to change its position against Italy accessing ESM loans, they said.

Five-Star and its governing coalition partners from the centre-left Democratic Party have agreed that Finance Minister Roberto Gualtieri should explain the ESM reform before a Senate committee on Friday, before attempting any parliamentary vote. This should allow the minister to provide the Nov. 30 eurogroup meeting of eurozone finance ministers with an assurance that Italy will ratify the ESM overhaul.

NO LOAN

But, while Five-Star is moving towards accepting the reform, disagreements with the Democrats persist on the wording of the ratification text. Five-Star want the text to state that the approval is not a first step to seeking an ESM loan, whereas the Democrats say the money is needed to rebuild the economy after the Covid-19 pandemic.

Some parts of Five-Star continue to oppose the ESM reform, which they argue needs to be completely redesigned to take account of the dramatic effects of the pandemic. Five-Star politicians have said the reform would impose onerous conditions on countries requiring financial assistance.