(Bloomberg) -- Italy’s next government -- whoever winds up leading it -- will have a lengthy list of problems needing immediate attention.

Thorny issues include getting a budget that complies with European Union deficit rules through parliament by the end of December, finding a solution to the environmental pollution charges threatening thousands of jobs at Europe’s largest steel plant and working out who will run some of the biggest state-owned enterprises and key government agencies.

Here are some of the most pressing items:

2020 Budget

Drafting next year’s finance plan is going to absorb most of the attention of the new administration, which will have to balance the need to avoid a politically damaging sales-tax increase -- introduced by a previous government -- with EU pressure to keep the deficit within the bloc’s constraints. Sales tax will automatically rise on Jan. 1 from 22% to just over 25% unless an additional 20 billion euros can be found to prevent the measure taking effect. Meanwhile, Salvini has said that he is working on a package of tax cuts and investment measures worth 50 billion euros ($55 billion) that he promised will be approved "in 24 hours" if he is elected. Analysts expect a Five Star-Democrat coalition to be more market friendly and avoid another showdown with the EU. The deadline to present the budget to the bloc for approval is in mid-October.


Five Star leader Luigi Di Maio has been working for months on a plan to find a buyer for troubled airline Alitalia. State-owned railway Ferrovie dello Stato SpA is currently in talks with the Benetton’s family industrial arm Atlantia SpA , the finance ministry and Delta Air Lines Inc. to come up with a viable business plan for Italy’s flagship carrier. Alitalia has been under special administration for more than two years and faces either liquidation or de facto nationalization. It loses about 700,000 euros a day and has hasn’t posted profit for at least 15 years, costing taxpayers about 10 billion euros since 2008, according to one estimate.

Ilva SpA

After ArcelorMittal stepped in to buy the colossal Ilva steel plant in southern Italy, the future of the business depends on a fragile agreement between the world’s biggest steelmaker and the government over immunity from environmental pollution charges. The immunity deal expires on Sept. 6 and Arcelor has threatened to shutter the facility without fresh assurances.

CEO Mandates

Early next year, the government will have to make politically sensitive appointments of new management at most of the biggest state-owned companies, including Eni SpA, Enel SpA and Leonardo SpA. This typically involves delicate and lengthy negotiations between government officials and the companies’ largest shareholders. The next government will also need to appoint dozens of senior public officials, including the head of the communications authority and the anti-corruption authority.

To contact the reporter on this story: Chiara Albanese in Rome at calbanese10@bloomberg.net

To contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Iain Rogers, Richard Bravo

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