Italy is preparing 15-20 billion euros of new stimulus packages to push the budget deficit of national output beyond 11%. The new package involved additional borrowing and adding public debt to 157% from the previous target of 155.7% national output, and not yet been approved by the parliament. The funds will be used to support local government as the tax revenues are nosedived and supplement the income of temporarily laid-off workers. Italy’s public debt proportion is second-largest in Euro-countries after Greece.
The Coronavirus outbreak has hit Italy hard, from first confirmed cases last February and has killed more than 34,600, making Italy in the list of one of the worst pandemic-stricken countries.
The Treasury projecting the economy will contract by 8% at the minimum this year. To soften the blow, Italy has taken up measures which raise the deficit to 10.4% of national output, by 75 billion euros ($84.12 billion). The last year's budget gap was only 1.6%, the record low in 12 years.
Italy’s Prime Minister Giuseppe Conte spoke that the government is studying new measures to help sectors badly hit by the pandemic such as tourism and provide additional resources to help struggling banks from losses loans to SMEs while waiting for initiatives from European Union.
The new stimulus is scheduled to be approved in July, but Rome has promised the allocation up to 180 billion euros stimulus for families and firms before, including state guarantees on banking loans, but the actual spent is likely to be much less.
