Italy Finance Ministry Says Report of Cabinet Rift Invented

(Bloomberg) -- The Italian Finance Ministry said a report of a rift that could spell the end of Minister Giovanni Tria is “pure invention.”

A spokeswoman for the ministry commented by telephone after La Repubblica newspaper said Deputy Prime Ministers Matteo Salvini and Luigi Di Maio were joining forces to fight Tria for control of state lender Cassa Depositi e Prestiti SpA. Hours after the report, the government was said to have agreed on a new CDP leader Friday afternoon, news agency Ansa said.

The two strongest political figures in the coalition government had been opposing Tria’s candidate to head the lender and threatened to demand the finance minister’s resignation unless he backed down, Repubblica reported, without saying how it obtained the information.

Five Star leader Di Maio told reporters in parliament there is no clash with Tria and he never asked the minister to resign, Ansa reported.

Italian bonds and stock pared their losses following the denials, with the 10-year spread trading at 221 basis points at 11:42 a.m. in Rome after earlier touching 226 basis points.

Tria, a 69-year-old academic, is seen as a stabilizing force in the government. He’s viewed as a guarantor that the populist coalition will observe some degree of fiscal responsibility despite the populists’ plans to cut taxes and boost spending on benefits. Di Maio in particular needs to make progress on his flagship proposal for a citizens’ income for poorer families after being eclipsed by his rival Salvini during their first two months in power.

Under Italian law, the prime minister can’t directly fire government ministers though he can pressure an official to step aside. A rift between the key political figures in the government and the finance chief could lead to gridlock with the administration set to deliver details of its first budget in September.

Tria had been pushing for European Investment Bank Vice President Dario Scannapieco to head the CDP and had vetoed an alternative nominee, Fabrizio Palermo, who is currently chief financial officer at the CDP, according to La Repubblica. Ansa did not say who was said to have been chosen on Friday.

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