Italy Approves Long-delayed Economic Stimulus Package In Coronavirus Fight
ROME (REUTERS) - The Italian government has approved a long-delayed, €55 billion (S$84 billion) stimulus package aimed at helping Italy's battered businesses and struggling families survive the coronavirus crisis.
Prime Minister Giuseppe Conte had promised to introduce the measures last month, but repeated rows within his increasingly shaky coalition over various aspects of the decree, which runs to almost 500 pages, led to repeated holdups.
"We have worked on this decree aware that the country is in great difficulty," Conte said on Wednesday (May 13) following a Cabinet meeting.
The decree takes immediate effect.
Rome has forecast that the economy will contract by at least 8 per cent this year as a result of the Covid-19 epidemic, which has so far killed 31,106 people in Italy - the third-highest death toll in the world after the United States and Britain.
After a two-month lockdown, tight restrictions on businesses and movement are being gradually rolled back.
"This decree provides the prerequisites so that this phase of reopening can immediately offer the prospect of an economic and social recovery," Conte told reporters.
The stimulus package, which follows an initial €25 billion package introduced in March, includes a mix of grants and tax breaks to help firms ride out the downturn. It also offers help to families, including subsidies for childcare and incentives to boost the ravaged tourism sector.
The Treasury has predicted that the extra spending, coupled with a collapse in tax revenues, will push the budget deficit to 10.4 per cent of gross domestic product this year, while public debt was seen surging some 20 percentage points to 155.7 per cent of GDP.
HELP FOR BANKS
Conte said the decree set aside €25.6 billion to help employees and the self-employed, including additional funding for temporary layoff schemes that enable firms to furlough rather than shed staff.
The new measures also include a norm to let irregular migrants obtain temporary work papers to enable them to be hired as farm labourers or carers. The ruling 5-Star Movement initially fought the initiative, but eventually gave way rather than risk seeing the government fall apart over the issue.
The Bill provides for payments of between €400 and €800 a month for a maximum of two months to help those with no income who are excluded from the current welfare safety net.
Among a raft of other measures, Conte said regional taxes due to be paid by businesses in June would be scrapped at a cost of €4 billion.
There was also a provision to create an equity fund for state lender Cassa Depositi e Prestiti (CDP) to invest in non-financial firms deemed strategically important.
In an effort to preserve financial stability, the decree said the Treasury was ready to offer state guarantees for up to €15 billion of new bonds to support banks.
Additional provisions are aimed at encouraging healthy lenders to take over small failing banks.