Italy readies 15-20 billion euros of new stimulus, pushing deficit beyond 11% of GDP: source
Reuters
Published Jun 22, 2020 07:45AM ET
By Giuseppe Fonte
ROME (Reuters) - Italy is preparing a new spending package worth 15-20 billion euros to help its battered economy through the coronavirus crisis, which will push its budget deficit beyond 11% of national output, a government source told Reuters.
The new package, which must be approved by parliament, will involve additional borrowing and drive Italy's public debt towards 157% of national output from the 155.7% currently targeted, the source added.
"We need to boost funds to supplement the income of workers temporarily laid off and support local authorities whose tax revenues were hit by the lockdown," said the source, citing some of the uses the new borrowing would be put to.
The Treasury declined to comment.
The COVID-19 outbreak first confirmed on Feb. 21 has killed more than 34,600 Italians, putting it among countries hardest hit by the pandemic. The Treasury estimates the economy will contract by at least 8% this year due to lockdown measures.
Looking to soften the recession, Rome has already adopted measures set to raise the deficit by 75 billion euros ($84.12 billion) this year to 10.4% of national output. Last year's budget gap was just 1.6%, its lowest for 12 years.
Italy's public debt as a proportion of GDP is the euro zone's largest after that of Greece.
Prime Minister Giuseppe Conte said on Sunday the government was studying new measures to help struggling sectors such as tourism while it awaited help from European Union initiatives for the countries worst-hit by the coronavirus.
The government also plans to provide additional resources for a state-backed fund that shields banks from losses on loans to small- and medium-sized companies, Economy Minister Roberto Gualtieri said last week.
Ahead of the new stimulus, to be approved in July, Rome has so far pledged up to 180 billion euros of economic help for families and firms, including state guarantees on banking loans, but much less is likely to be actually spent.
The government will seek authorisation from parliament to increase the 2020 budget deficit, the source said.
($1 = 0.8916 euros)
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.