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Renzi Sworn in as Italian Premeir After Toppling Letta

Italy's Prime Minister-designate Matteo Renzi. Photographer: Alessia Pierdomenico/Bloomberg
Italy's Prime Minister-designate Matteo Renzi. Photographer: Alessia Pierdomenico/Bloomberg

Feb. 22 (Bloomberg) -- Matteo Renzi was sworn in as Italian prime minister one week after toppling Enrico Letta’s government in an intra-party dispute.

Renzi and his cabinet took the oath in Rome today from President Giorgio Napolitano. Finance Minister Pier Carlo Padoan, who was in Sydney yesterday for the Group of 20 finance chiefs meeting as chief economist of the Organization for Economic Cooperation and Development, was traveling back to Italy and will be sworn in at a later stage, according to a statement from Napolitano’s office.

Renzi, 39, becomes the youngest head of government in post-World War II Italy. His formal acceptance of the mandate yesterday came after four days of talks with lawmakers aimed at reconstructing a ruling coalition and agreeing on a cabinet. Renzi will face confidence votes in both houses of parliament next week, with attention focused on how many votes he gets in the fragmented senate.

“Despite uncertainties, we expect Renzi’s newly formed government to survive the confidence vote at the senate,” Alessandro Tentori, an analyst with Citigroup Inc., said in a research report. “We see this as a positive market development for Italy.”

Renzi takes the helm of the euro area’s third-biggest economy as it emerges from recession with a 12.7 percent unemployment rate. Renzi has pledged to overhaul Italy’s labor market, modify the tax code and change the country’s election law during his first 100 days in office.

Bond Yields

Italian 10-year bond yields declined 5 basis points to 3.6 percent in Rome yesterday after falling to an eight-year low of 3.53 percent earlier in the week.

Renzi reconfirmed Interior Minister Angelino Alfano, Infrastructure Minister Maurizio Lupi and Health Minister Beatrice Lorenzin in the roles they held under Letta. The justice ministry goes to Andrea Orlando, who served as environment minister under Letta. Federica Mogherini was named foreign minister, replacing Emma Bonino, while Federica Guidi becomes economic development minister.

The cabinet is composed of eight women and eight men.

Padoan, 64, replaces Fabrizio Saccomanni and becomes the fourth straight non-politician to occupy the finance minister’s position. With the intensification of the euro-area crisis in 2011, politicians began looking for outsiders to help reassure markets and share the criticism for unpopular decisions.

Young Age

Padoan “will help Renzi make up for his young age, lack of international experience and macroeconomic management,” said Federico Santi, an analyst with Eurasia Group in London.

Renzi, the mayor of Florence, is coming to power without holding a nationally elected office. Italian President Giorgio Napolitano, 88, chose not to dissolve the legislature and call snap elections when Letta’s government fell. Instead, he gave Renzi the task of assembling a majority and seeking to preserve the legislature through 2018, when its term ends.

Renzi toppled Letta by convincing the Democratic Party on Feb. 13 to withdraw its support from the 10-month-old government. The Democratic Party, which counts Letta as a member, elected Renzi as general secretary in December.

To contact the reporters on this story: Andrew Frye in Rome at afrye@bloomberg.net; Chiara Vasarri in Rome at cvasarri@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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