(Bloomberg) -- Euro-zone finance ministers publicly focused on how to fix the region’s energy crisis this week were privately worrying about something else too: the composition of Italy’s next cabinet.
The currency’s fiscal guardians ended two days of meetings in Luxembourg in suspense on who will represent the euro zone’s third-biggest economy at their next gathering in November, and whether that choice will unsettle financial markets.
Worried about such an outcome, at least four people present said privately on Tuesday that they wouldn’t mind it if likely premier Giorgia Meloni picks European Central Bank Executive Board Member Fabio Panetta or a similar technocratic candidate. They spoke on condition of anonymity because of the sensitivity of commenting on another country’s political affairs.
Panetta, a former Bank of Italy official who attended the Luxembourg meeting on Monday, has often been cited in Italian media as a top candidate for the role. He has generally denied interest in the job while at the same time never really ruling it out, stoking expectations that he might accept if asked by an important institutional figure such as Italian President Sergio Mattarella.
The choice by Meloni, whose right-wing coalition won last month’s general elections, will be highly consequential for the rest of the region. The next finance minister will take charge of an historically weak economy burdened by high debt, dependent on energy exports and prone to financial-market speculation, most recently in June.
How Meloni juggles the demands of her fractious alliance will be a key determinant in her decision. Keeping current Finance Minister Daniele Franco, another former Bank of Italy official, would be the default, but that idea seems to be losing traction as she seeks solutions that show a break with the past, according to two people familiar with the matter.
Alternatives might draw on political veterans or less tested candidates. Among names cited in Rome gossip are Domenico Siniscalco and Giulio Tremonti, both previously finance ministers for rightwing administrations led by Silvio Berlusconi, and Luigi Buttiglione, a former Bank of Italy official who has spent the past two decades in finance.
One option would be to split the powerful Economy Ministry into two, with one administration in charge of the budget and another of fiscal policy.
That would add a seat in the cabinet, a useful option for a coalition governments, and dilute the power of the role. Maurizio Leo, an adviser to Meloni, has been floated as a possible minister in charge of tax policy in such a scenario.
©2022 Bloomberg L.P.
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