ROME, Dec 20 (Reuters) - Italy’s Senate approved legislation on Thursday needed to amend the constitution to make future governments run balanced budgets, giving final clearance to a key part of the EU’s fiscal compact aimed at shoring up financial stability.
The balanced budget amendment, aimed at calming market fears over the stability of Italy’s public finances and its capacity to service its 2 trillion euros public debt, was approved in principle in April.
But the legislation needed to put the amendment into effect had to be rushed through parliament after Prime Minister Mario Monti announced he would be standing down early and would hand in his resignation once the 2013 budget is approved.
The constitutional amendment comes into effect from 2014 and will allow future Italian governments to run budget deficits only in exceptional circumstances and with the approval of parliament.
It will also establish a new authority to monitor the budget, similar to the U.S. Congressional Budget Office.
As the Senate wrapped up the last pieces of legislation needing approval before the government resigns, it also gave final clearance to a government decree intended to keep the troubled ILVA steel plant running during a two year cleanup.
Approval of the 2013 budget law is expected on Friday evening, clearing the way for President Giorgio Napolitano to order parliament to be dissolved.
Reporting by James Mackenzie; Editing by Andrew Heavens