Italian Leader Fulfills Vow to Resign by GIADA ZAMPANO AND

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Italian Leader Fulfills Vow To Resign

BY GIADA ZAMPANO AND DEBORAH BALL

ROME—-Italy’s Prime Minister Matteo Renzi formally resigned on Wednesday, paving the way for a rapid change of government.

In a meeting with President Sergio Mattarella after the upper house approved his government’s budget for 2017, Mr. Renzi followed through with the resignation he tendered on Monday. The president earlier had asked Mr. Renzi to stay until the budget was secured.

Voters handed Mr. Renzi a resounding defeat Sunday in a referendum he had backed to reform Italy’s constitution. By stepping aside, Mr. Renzi clears the way for what government officials expect to be the rapid formation of a caretaker government that would help ensure stability amid a looming banking crisis.

Mr. Mattarella’s office said the president would start consultations with political parties on Thursday afternoon and complete them by Saturday afternoon, indicating he could name a new prime minister by the weekend. Two candidates under consideration are Economy Minister Pier Carlo Padoan and Senate speaker Pietro Grasso.

Italy’s upper house approved the Renzi government’s 2017 budget Wednesday afternoon following a confidence vote of 173 in favor and 108 against. Since the lower house already passed the bill, the budget now becomes law. The €27 billion ($28.89 billion) expansionary budget averts a planned valueadded tax increase and includes measures to allow people to retire earlier.

The crisis afflicting Italy’s No. 3 lender, Banca Monte dei Paschi di Siena SpA, is creating pressure to hasten the formation of a new government. The bank had planned to raise a critical €5 billion, but the political situation has sapped investor appetite for the transaction. As a result, a government rescue is appearing more likely.

Meanwhile, lawmakers from across the political spectrum called for early elections, now slated for spring 2018.

The antiestablishment 5 Star Movement, which wants to hold a nonbinding plebiscite on Italy’s euro membership, and another euroskeptic opposition party, the Northern League, have said this week that public dissatisfaction with the government is deep, and argued Italians should be able to elect a new parliament.

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