Italy is in midst of severe economic crises, as it evident from the recent push for a larger than anticipated debt expansion. Conte has moved a bid for crisis debt to be increased by two times than previously proposed by Finance Minister.
Conte does not have a working majority in the cabinet anymore, as Matteo Renzi’s party walked out of the cabinet. This problem of losing a working majority has brought the government to a deadlock when it comes to debt expansion.
The Prime Minister of the country is set to appear before both Senate and Parliament in the following week. It is believed that triggering a political feud in the middle of the COVID-19 crisis is an irresponsible move.
Renzi had been a staunch believer in the idea of taking funding from the European Stability Mechanism, but it was not supported by Conte. He also wanted the government to provide adequate funds for the healthcare sector which was severely hit during the pandemic.
The government is desperate to get the funding approved from the Senate to ensure people are provided with healthcare facilities during the pandemic. Italy’s economy needs this funding as it is crippling down, in the wake of the COVID-19.
Conte has a dual motive ahead of him as he wants to convince Parliament to approve his appeal regarding the expansion in the loan request. And he also wishes to get the vote of confidence from the Parliament to maintain his political standing.
In anticipation of the fresh elections in June 2021, the bond prices fell in Italy, and it is not a good sign. This means that the investors are least interested to invest in the country.
It is not the first time that the government is taking the step of expanding its borrowing limits. This has happened before – in March 2020 – when the country went into complete lockdown.
It is a crucial part of Conte is to get the vote of confidence; otherwise, he has to leave the office. If he gains the vote of confidence from the Parliament, Conte will be able to call off the voting for re-election.