MNI SOURCES: Italy May Need Extra EUR130-150 Bln 2020 Funding

--Figure Takes Account Of Additional Spending Already Announced

--Bond Issuance A Significant Portion, But Still To Be Finalised

By Silvia Marchetti

     ROME(MNI) - Italy may need an additional EUR130-150 billion in funding this

year to address the economic impact of the coronavirus pandemic, ruling

coalition sources told MNI, adding that much of it will come from bond issuance.

     This additional funding requirement takes account of a decree authorising

an extra EUR55 billion in deficit still being readied and a EUR25 billion decree

in March, but calculating the amount that will need to be raised on the markets

will take a few more weeks as details are finalised on Europe's coronavirus

rescue package, the sources said.

     The net balance to be funded this year, according to the latest fiscal

plan, is roughly EUR180 billion.

     "A significant portion of this extra financing requirement will be new

issuance, but additional financing needs will also be met through other channels

still to be defined," said one source.

     --EUROPEAN AID

     Key to determining issuance needs will be the amount of European Union aid

Italy receives this year and the impact of relaxing state aid rules, sources

said. Prior to the pandemic, Rome's initial issuance target had been EUR400

billion.

     "We are expecting significant EU aid through the EC's SURE [unemployment

insurance scheme], European Investment Bank liquidity support and unfrozen EU

funds. It also depends on whether Italy will effectively apply to the European

Stability Mechanism's EUR36 billion," said another source, adding that an ESM

loan would depend on terms.

     The fiscal plan will be revised in September ahead of the 2021 budget law.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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