(Bloomberg) -- Top European Union officials are confident that Italy will soon approve a reform of the euro-area bailout fund, but the optimism may be premature in light of divisions within Prime Minister Giorgia Meloni’s ruling coalition.

European Commission Vice President Valdis Dombrovskis and Economy Commissioner Paolo Gentiloni kicked off the week by hailing Italian progress toward ratifying a minor overhaul of the European Stability Mechanism. Italy is the only euro-area country that hasn’t approved the reform.

Still, a senior Italian official cautioned late on Monday that Meloni’s government remains bound by a parliamentary vote against the ratification. 

While the government has signaled some willingness to end years of bickering and tensions over the issue between Rome and Brussels, large parts of the ruling coalition remain deeply opposed to the ESM reform, the person said, asking not to be named discussing confidential issues. Attempts to find a compromise within Meloni’s majority won’t be easy, the person said.

The premier has long opposed the reform of the ESM, which has a lending capacity of €417 billion ($452 billion). Despite its size, no country tapped it during the pandemic or more recently to respond to the energy crisis, and Meloni has pointed out that nobody has made a request out of fear of being singled out as a bailout recipient. 

Meloni last week demanded a wide-ranging overhaul of the fund to make it more effective in supporting the bloc’s economies, pending which her government delayed the approval of the treaty. 

“We are seeing some progress, so hopefully we will be able to confirm EU wide ratification of the treaty,” Dombrovskis told reporters in Brussels on Monday. His words were echoed by Gentiloni who, however, specified that the final decision is up to the Italian executive. 

ESM Managing Director Pierre Gramegna struck a similar cord.

“I visited Italy last week I had constructive meetings with both the finance minister and the president of the government and now it is all in the hands of the Italian parliament,” he told reporters after meetings of euro-area finance chiefs in Brussels.

La Stampa reported earlier Monday that Rome was leaning toward approving the reform.

The ESM was set up in 2012 to help euro-area economies in exchange for strict reforms. Meloni said in December that Italy will never tap the fund.

Gentiloni and Dombrovskis pointed out that the issue of whether or not to tap it is separate from the approval of a minor reform.

“Ratification from Italy as well is useful for all the countries, regardless of who will use it and who will decide not to,” Dombrovskis said.

--With assistance from Jorge Valero and James Regan.

(Updates with ESM chief starting in eighth paragraph)

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