MNI EXCLUSIVE:Italy Package To Total EUR30 Bln, More To Follow

An additional fiscal package set to be announced by the Italian government in mid-April will add about EUR30 billion to the country's budget deficit, towards the top of end of previous reports, and will be followed later in the year by additional major spending plans, a senior Finance Ministry official told MNI.

Some members of Prime Minister Mario Draghi's cabinet had argued for announcing more than EUR30 billion in measures in April, but officials told MNI that the government decided that announcing too large a package could send the wrong message to markets.

"We are not worried about the deficit. But it is better to take it step by step, depending on need, one official said, after Finance Minister Daniele Franco said on Tuesday that fiscal support would be reduced gradually by the end of 2021.

Members of coalition parties told MNI they supported the additional spending, with Italia Viva senator Donatella Conzatti saying it would help to prepare for a planned fiscal reform.

AID FOR COMPANIES

The EUR30 billion package, to be made public in mid-April when the government will seek approval for an increase in the public sector deficit via an Economic and Financial Document, is aimed at sustaining the economy through the second half of the year in particular. Economy Undersecretary Claudio Durigon said last week it would add EUR20-30 billion to the deficit.

A third of the package will be targeted at companies, though details have yet to be finalised, an official said. It may include help for companies whose activities have been disrupted by Covid-19 to meet rental payments, although it is also possible that this particular measure will instead be added to a previous EUR32 billion package announced earlier in March, which still has to be ratified by parliament next month, the official said.

While some members of the coalition had wanted a bigger package, others had wanted to keep it as slim as possible. Senator Dario Damiani, of the centre-right Forza Italia, sees EUR20 billion as a reasonable figure, and notes that another EUR4-5 billion in measures can be employed by utilising decrees passed under former Prime Minister Giuseppe Conte without need foradditional borrowing.

The size of any further spending plans will depend on progress against Covid-19 and in vaccination, with officials pointing to the need to achieve Draghi's target of 500,000 vaccinations a day by the second half of April.