Italy to spend 40 billion more to help virus-hit economy

Italy to spend 40 billion more to help virus-hit economy
Italy's bars and restaurants are among the businesses hit hardest byrepeated closures over the past year. Photo: Tiziana Fabi/AFP
Italy's government has agreed to borrow another 40 billion euros this year to help mitigate the economic impact of the coronavirus pandemic, the prime minister's office said.

The money “will be used for new measures to support businesses and the economy,” a source at Palazzo Chigi told media after a cabinet meeting on Thursday.

The move comes just three months after the last expansion of the budget deficit, by 32 billion euros, as Italy seeks to recover from its worst recession since the end of World War II.

Prime Minister Mario Draghi has been under pressure to offer more relief to businesses struggling with coronavirus restrictions, after protests from a wide range of groups, from entertainment workers to restaurant owners.

READ ALSO: Protesters clash with Italian police over business closures

A draft version of the new ‘documento di economia e finanza‘ (Def) said the new funding would prioritise self-employed workers and small businesses, Italian media reports, and that the final version of the document would be published “by the end of April”.

On Thursday, the government also adopted new economic targets, according to the source from Draghi’s office.

It expects gross domestic product (GDP) growth of 4.5 percent in 2021 and of 4.8 percent in 2022, after a record fall of 8.9 percent in last year — the biggest in postwar history.

Italy has already spent more than 130 billion euros in propping up sectors shut by Covid-19 closures since the pandemic swept across the country in early 2020, causing more than 115,500 deaths.

READ ALSO: When is Italy likely to relax its coronavirus restrictions?

The latest budget correction adds to the country’s debt mountain, but in the current economic environment of ultra-low interest rates, government borrowing has become noticeably cheaper.

In addition, Italy hopes to fuel its economic recovery with EU grants and loans coming from its share of the bloc’s recovery fund.

Italy is set to receive around 190 billion euros, arriving between 2021 and 2026.

The government is currently drafting a final plan setting out how the money will be spent. It is due to be submitted for EU authorities’ approval by the end of the month.

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