The EU is ready to delay implementing the European Stability Mechanism (ESM) reform to avert a standoff with Italy, Reuters report.
The Italian government and opposition have expressed fears that the ESM reform could raise its debt servicing costs by making debt restructuring more likely. Italy has a 2 trillion euros public debt, equivalent to 138% of its GDP.
The reform would make the ESM more akin to the IMF, with support for States in financial difficulty made conditional on debt restructuring.
The Eurogroup agreed to the ESM reform in June and was due to be formally adopted in December.
On Monday, Italian prime minister Giuseppe Conte accused the opposition Lega has been lying in suggesting that it passed the ESM reform behind closed doors.
“The accusations made in recent days by several opposition figures about a lack of information or consultation over such a sensitive issue are completely false,” Conte said.
League leader Matteo Salvini has called on President Sergio Mattarella to intervene in the ESM case while Conte is threatening to sue Salvini.
Conte has said that a report was presented at a cabinet meeting in February 2019 that detailed ESM negotiations and stressed that “none of the ministers present, including those from the League, raised objections,” the Italian public agency ANSA reports.