Renzi needs to seal a formal coalition deal with the small
center-right NCD party to secure a majority and to name his cabinet
before seeking a formal vote of confidence in parliament, probably
later this week.
He has promised a radical program of action to lift Italy out of its
most serious economic slump since World War Two, but will have to
deal with the same unwieldy coalition which failed to pass major
reforms under its previous leader.
"In this difficult situation, I will bring all the energy and
commitment I am capable of," he told reporters after a 90-minute
meeting with President Giorgio Napolitano when he was given a
mandate to form a new government.
"The sense of urgency is extraordinarily delicate and important but
it's also true that, given the time horizon we have set of a full
parliamentary term, we'll need a few days before formally accepting
the mandate," he said.
The 39-year-old mayor of Florence has been expected to take over
since he engineered the removal of his party rival Enrico Letta as
prime minister at a meeting of the Democratic Party leadership last
week, following growing impatience with the slow pace of economic
The euro zone's third largest economy is technically no longer in
recession since it scraped back into growth in the fourth quarter of
2013. However, it remains profoundly marked by the crisis with a 2
trillion euro ($2.7 trillion) public debt, a rapidly crumbling
industrial base and millions out of work.
Renzi has promised swift action to create jobs, reduce taxes and cut
back the stifling bureaucracy weighing on employers and business,
but has offered few specific policy proposals and a promised Jobs
Act expected last month has been delayed.
However, he said he expected to lay out full reforms to Italy's
electoral law and political institutions by the end of February, to
be followed by labor reforms in March, an overhaul of the public
administration in April and a tax reform in May.
ECONOMY MINISTRY CHOICE EYED
With the formal steps leading to the formation of a new government
underway, attention has focused on Renzi's likely choice as economy
minister who will be vital to reassuring Italy's international
[to top of second column]
Speculation has concentrated on Lucrezia Reichlin, a professor at
the London School of Economics who is also in the running to become
deputy governor of the Bank of England.
If confirmed, her appointment would continue a series of technocrat
finance ministers following Bank of Italy official Fabrizio
Saccomanni, the incumbent, and his predecessor Vittorio Grilli, a
senior official from the Treasury.
Other possible candidates include Fabrizio Barca, a minister in the
technocrat government of Mario Monti which ran Italy from 2011 until
last year, and Giampaolo Galli, a PD member of parliament and former
Bank of Italy economist with a background in the business
Renzi declined to comment on the possible makeup of his cabinet.
"Our attention is on content and not other issues," he told
reporters after meeting the president.
One area which European Union partners will be watching closely is
budget policy, an area where Letta stuck to strict Brussels
orthodoxy, squeezing the deficit within the 3 percent of GDP
Renzi has said that Italy should be allowed to break the borrowing
limits in exchange for structural reforms to encourage economic
growth, an approach which could cause conflict with EU partners
Financial markets, which nearly sent Italy crashing out of the euro
zone little more than two years ago, have reacted favorably to his
expected nomination with 10-year bond yields falling to their lowest
level in eight years on Monday.
($1 = 0.7307 euros)
(Reporting By James Mackenzie; editing by Philip Pullella and David
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