Draghi agrees to try to form Italian government

Draghi agrees to try to form Italian government

Italy's borrowing costs fell sharply on Wednesday and were poised for their biggest daily fall since June after Italian President Sergio Mattarella looked set to ask former European Central Bank chief Mario Draghi to form a government.

The crisis was triggered by Matteo Renzi, another former prime minister, who clashed with Conte and the main coalition partners, the eclectic anti-establishment Five Star Movement and the center-left Democratic Party, over how to spend more than $200 billion in European Union funds to boost Italy's recovery from the pandemic.

Speaking briefly after the announcement he said Italy was facing a "difficult moment" and that it was time for unity.

"I am confident that from the talks with the parties and the groups in Parliament and social forces, unity will come out, and with it, the capacity to give a responsible and positive answer to the appeal of the president of the republic", Draghi told reporters at the presidential palace.

After the government crisis erupted, Mattarella asked the president of the lower Chamber of Deputies, Roberto Fico, to sound out political leaders to see if an alternative coalition could be formed. The 15-month-old alliance led by the center-left Democrats and the populist 5Star Movement collapsed after former Prime Minister Matteo Renzi pulled his Italia Viva party from the government over differences on the economic recovery plan.

Talks are believed to already be underway.

Italy, the first European country to be hit by the virus, has seen nearly 89,000 deaths since its outbreak emerged last February, the second highest toll in Europe and the sixth highest in the world.

Says caretaker govt could not draw up recovery fund plans.

A Draghi government would reinforce Italy's global standing at a time when it has the presidency of the G20.

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Draghi made no immediate comment on the presidential summons and it was not initially clear which parties in the deeply fractured parliament would support an administration he headed.

Conte was forced to resign after the small Italia Viva party of former premier Matteo Renzi quit the coalition in a row over the management of the twin coronavirus and economic crises.

Italy has seen more than 2.5 million COVID-19 infections so far and has recorded 89,344 deaths, according to Johns Hopkins University.

He said the nation needed a solid government and argued that now was not a good time for its political class to be focused on an election campaign. He suggested he was pleased with the outcome, praising Mattarella's "wise" decision.

Italy, the third-largest economy in the European Union, had been heading into a recession even before it became the first country in the West to be hit by COVID-19 last February.

Renzi's IV party and the PD have pledged support for Draghi who is widely credited with saving the euro zone from the brink of collapse in 2012, famously pledging to do "whatever it takes" to save the single European currency. The ensuing economic devastation has only made matters worse, with gross domestic product falling 8.8 per cent a year ago and almost 450,000 jobs lost, national statistics agency ISTAT reported this week.

Draghi, a Massachusetts Institute of Technology-trained economist, had led the Italian central bank from 2005-2011 when he was tapped to lead the ECB, a job he held until 2019. Prior to that, he had been a vice-chairman and managing director at Goldman Sachs International in London and an executive director at the World Bank.

Draghi, 73, is perhaps best known for his intervention as European Central Bank chief during the peak of Europe's debt crisis in 2012.

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