Italy prepares for deficit hike

Italy will introduce this week measures worth 3.6 billion euros ($3.5 billion) to help the economy withstand the largest outbreak of coronavirus in Europe, Economy Minister Roberto Gualtieri said.

In an interview with La Repubblica newspaper, Gualtieri said this amounted to 0.2 per cent of gross domestic product (GDP) and would come on top of an aid-package worth 900 million euros that was unveiled on Friday for the worst-impacted areas. Gualtieri said the new bill would include tax credits for companies that reported a 25 per cent drop in revenues, tax cuts and additional funds for the health service.

“I want to reassure Italians that we are well aware of the problems and dangers,” Gualtieri said, adding that if additional help was needed it would have to come at a European level.

Opposition politicians said the proposals were far too limited, with the head of the far-right League, Matteo Salvini, demanding “at least 20 billion euros” of additional spending.

Italy has registered more than 1,100 confirmed cases of coronavirus since the contagion came to light in wealthy northern regions on Feb. 20 and at least 29 people have died.

The economy minister said he was confident the European Union would approve the proposed hike in Italy’s official deficit target, adding eurogroup ministers would talk mid-week by telephone about the situation.

Italy has the biggest debt pile in the eurozone after Greece, but Gualtieri said public finances were solid and predicted the 2019 budget deficit would come in at between 1.6 per cent-1.7 per cent of GDP against an original target of 2.2 per cent. The official data for 2019 is due to be released on Monday. Italy had forecast a deficit of 2.2 per cent for this year, based on the assumption the economy would grow 0.6 per cent in 2020.

Reuters