Italy’s populists deny they’ll ask for debt forgiveness after clinching power

Italian Northern League leader Matteo Salvini speaks during a political rally in Milan, Italy February 24, 2018.

Tony Gentile | Reuters

Italian Northern League leader Matteo Salvini speaks during a political rally in Milan, Italy February 24, 2018.

The Italian right-wing Lega party denied reports which which’s seeking a 250 billion euro ($ 296.16 billion) debt write-off if which becomes part of a power-sharing deal with the anti-establishment 5 Star Movement (M5S).

Lega along with also the left-wing M5S have been locked in negotiations for more than two months, trying to find a political deal which would certainly allow them to jointly govern Italy. This specific comes after a stalemate at national elections back in March where no party gained enough votes to go which alone.

According to the Huffington Post Italy, which cited a draft of their negotiations dated May 14, the two parties were seeking to ask the European Central Bank (ECB) for a debt haircut of 250 billion euros. which also included a request for a mechanism which would certainly allow member states to exit the euro zone. However, an economics spokesman for Lega denied Wednesday which the request was ever within the draft program.

The report drove Italian borrowing costs higher earlier on Wednesday morning, meaning investors grew concerned about lending to the country’s government. The yield on the 10-year paper hit a two-month high at 2.003 percent along with also the two-year bond yield also rose to 0.007 percent. Investors have been monitoring the political developments in Italy on concerns which a populist government will bring further fiscal slippage. Italy is actually the euro zone country with the second-highest level of public debt at about 130 percent of its GDP (gross domestic product).

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