UPDATE: MNI SOURCE: Italy Lega, 5 Star Coalition Deal At Hand

--Adds to story with quotes after paragraph 6

By Silvia Marchetti

     ROME (MNI) - A coalition deal between Italy's Lega Party and the 5 Stars

Movement is expected to be ready for tomorrow, a senior source close the

negotiations told MNI late Friday.

     The official, a top Lega party deputy, elected in March, and who is

currently working on the agreement, expressed optimism over key program points

of convergence and said the document would be ready on Saturday.

     "We are working on it, and everything is going smoothly, according to

plans. There are no tensions. We aim to define it by tomorrow (Saturday) so as

to present it officially to the head of state Sergio Mattarella early next week,

as soon as possible," said the source.

     The deal between 5 Stars and the Lega will thus put an end to the prolonged

political stalemate that followed the Mar 4 election. Both parties had failed in

reaching agreement over the last two months, but when faced with the risk of

stepping aside to leave room for a technocrat government, they managed to get

past previous differences.

     --WIDE SUPPORT

     Lega secured 18% of votes at the election and 5 Stars garnered 33.7%.

Together they have the necessary support to form a ruling majority.

     The two parties progressed towards a deal after former premier Silvio

Berlusconi's Forza Italia group -- a centre-right coalition ally of the Lega --

decided to take a step back and give the green light to the agreement.

     The source said there were several points of convergence that made a

"green-yellow" alliance between Lega and the 5 Stars Movement feasible.

     "The more we discuss, the more we find similarities. Tomorrow's meeting

should be definite in giving Italians a clear answer to their request of

stability and of having a functional government," stressed the source.

     Among key points expected to top the ruling deal ARE Lega's flat tax and

both parties' fight against illegal immigration and support to low earners and

the unemployed. A compromise of sorts is expected to be reached over a

watered-down version of the 5SM "citizenship wage" that grants up to E780

monthly to the jobless.

     --PLEDGE EU RULE ACCEPTANCE

     On Europe, both parties pledge to respect EU fiscal rules but push forth

greater requests of burden-sharing on the migration front and more leeway in the

interpretation and application of tight budgetary treaties.

     The Lega appears to have softened its anti-EU stances, calling for

"unlimited spending" and over-expansive budgets.

     One thorny issue however remains voters' approval of the deal. The 5SM,

loyal to 'internet democracy', have pledged to have all their supporters vote

the joint ruling agreement with Lega online.

     It is not yet clear who will be the next premier -- whether Lega's Matteo

Salvini or 5 Stars Luigi Di Maio -- if the two will take turns or even if it

will be a third figure. The source however argued that "names and positions are

not important now. We are dealing with the definition of a solid, balanced

program".

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

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