Mr Mario Draghi has signalled that he is determined to resign as Italy's prime minister next week since he does not have the backing of all the parties in his splintered governing alliance.
Italian President Sergio Mattarella rejected Mr Draghi's resignation on Thursday (July 14), urging him to try to shore up support among his parliamentary allies.
Mr Draghi had offered to quit after the second-biggest party in his ruling coalition, Mr Giuseppe Conte's Five Star Movement, effectively abstained in a confidence vote in the Senate.
Mr Draghi is unwilling to reconsider his decision to leave government and is currently expected to reiterate that position when he addresses lawmakers in Rome on Wednesday (July 20), according to people familiar with the matter, who asked not to be identified because the conversations were private.
Five Star leaders were set to meet on Saturday (July 16) to decide how to move forward in the coming days, according to reports in Italian media.
A resignation by Mr Draghi would throw Italy into turmoil just as Europe is contending with an energy crisis fomented by Russia's war in Ukraine.
And the uncertainty comes at a difficult time for the euro area, with the probability of a recession there growing.
A decision to resign would thwart frantic attempts by Mr Mattarella and other political leaders to avert a government crisis before Mr Draghi's address on Wednesday.
Since he was appointed by Mr Mattarella to guide Italy through the Covid-19 pandemic in early 2021, Mr Draghi has said he would only remain in office if he had the backing of all the parties in the governing coalition.
He reiterated the same line in recent weeks as tensions mounted with Mr Conte, who has been critical of Mr Draghi's response to the economic crisis and has also opposed Italy's shipments of weapons to Ukraine.