By Giuseppe Fonte
ROME (Reuters) - The Italian parliament approved the government's latest economic forecasts on Wednesday, but the Senate vote exposed deep divisions on the political left that could complicate the drafting of the 2018 budget.
Prime Minister Paolo Gentiloni's coalition won two votes in the upper house on the Treasury's Economic and Financial Document (DEF), even though parliamentarians with the leftist Mdp party walked out of one of the ballots.
The Mdp was formed earlier this year following a schism in the Democratic Party (PD), with a small group of left-wingers accusing PD leader Matteo Renzi of shifting the ruling party too far to the right and shunning its Socialist roots.
National elections are due in early 2018, and political jockeying is on the increase as Italy's myriad parties seek to establish clearly defined identities ahead of the vote.
The Mdp, backed by former prime minister Massimo D'Alema, is particularly anxious to put clear water between itself and Renzi's PD, seizing on the DEF to push its demands for more money to be spent on health care and job creation.
"We have sent a political signal," said Mdp senator Federico Fornaro.
Gentiloni, who does not have a clearly defined majority in the upper house, was saved any embarrassment thanks to the backing of 12 Senators from the center-right ALA group, which is headed by Denis Verdini, previously close to former prime minister Silvio Berlusconi.
Centre-left politicians said the Mdp was trying to smear Renzi by portraying him as a rightwinger.
"The question of relations between the Mdp and the government is tied to its competition with the PD ahead of the elections," said senior centrist politician Mario Catania.
"The point is that the Mdp is following D'Alema's line and pushing for the downfall of Renzi."
The government has to present its budget by Oct. 20, giving parliament until the end of the year to approve the package in what could be the last major act of the legislature. Gentiloni hopes to get the backing of the Mdp to guarantee smooth passage through both houses.
The DEF hiked the 2018 growth forecast to 1.5 percent from a previous target of 1.0 percent, giving the Treasury room to present a more expansive budget than originally expected.
"The health system is an area where we will weigh up measures to improve it and make it more efficient," Economy Minister Pier Carlo Padoan told the Senate on Wednesday in an apparent nod to Mdp demands.
(Additional reporting by Massimiliano di Giorgio, Writing by Crispian Balmer; Editing by Catherine Evans)