ROME (Reuters) - Italy’s Chamber of Deputies on Wednesday approved legislation that requires the country to run balanced budgets, but whether the Senate will convert it into law before parliament is dissolved is still unclear.
The measure has been closely watched on financial markets, concerned that the unexpectedly early end to Prime Minister Mario Monti’s government will hold up key pieces of legislation.
If made law, the balanced budget amendment will take effect in 2014. The amendment was introduced after the passage of a European Union treaty, known as the fiscal compact, whose aim was to bolster fiscal discipline amid the euro zone crisis.
The lower house voted 442 to three, with two abstentions, to approve the measure, which is needed to activate a constitutional amendment passed in April.
The Senate has not put the legislation on its pre-Christmas timetable, and parliament is widely expected to be dissolved just before or after the holiday.
Monti said on Saturday he would resign immediately after the 2013 budget is approved, which is expected sometime in the next two weeks.
Italy’s borrowing costs jumped on Monday after Monti announced his resignation and Silvio Berlusconi said he would run for power for a sixth time.
Failure to pass the budget measure might send the wrong message to markets before the national election, widely expected in February.
However, if the Senate does not approve the legislation, the new parliament will have plenty of time to pass it before the year-end deadline.
The president of the Senate budget committee, Antonio Azzollini, said on Tuesday it was still possible to vote on the amendment before parliament is dissolved if the main parties were willing to work quickly.
“I think we can make up for lost time,” he told reporters. “If there is a political agreement it can still be approved without problems”.
Reporting by Roberto Landucci; Writing by Steve Scherer; Editing by Hugh Lawson