The Italian government approved €25 billion of extra spending on Wednesday, with this being the third major cash injection into the economy to try and help the coronavirus stricken country recover.
According to the new stimulus, there will be additional borrowing that will increase the country’s 2020 budget deficit to 11.9% of its national output.
Italy previously had a goal to try and lower its budget deficit to 10.4%, with its budget deficit in 2019 being just 1.6%, the lowest in 12 years.
Italy is one of the most affected countries by the coronavirus pandemic, being the European country with the fourth most cases, yet the situation has improved immensely after a disastrous two-month period in March and April, registering 6,553 cases on March 21 alone.
A statement from the prime minister’s office after the move was approved read that “It is essential to continue to support the productive system and the income of citizens”.
The meeting for the approval of the move ended around midnight, after plenty of negotiations to make the appropriate move for the future.
This package will help Italy to try and stabilise its economy as it waits for over €200 billion funds in grants and loans from the Recovery Fund formed by the European Union, which was approved this week.
The Italian government stated that the measures will be present in an emergency decree early on in August, after a parliamentary vote on July 29 to fully authorise the move.
Economy Minister Roberto Gualtieri said in parliament on Wednesday that a portion of the extra spending will be directed towards allowing people to pay their taxes in instalments, rather than one single payment.
Additionally, these extra funds will extend the financing for temporary layoff schemes for another 18 weeks. The companies that have been inflicted by the pandemic the most during the first half of 2020 will be allowed to extended the scheme in order for them not to make their workers redundant.
This €25 billion comes on top of the €75 billion that has already been injected into the economy to help businesses and families cope with the pandemic.
Whilst the government has set aside around €180 billion in total, including state guarantees for bank loans, just over more than half is set to be spent.