Italy’s Government Signs Off on 38 Billion-Euro Aid Package

(Bloomberg) -- Italy’s government approved the draft of next year’s budget, a crucial step toward gaining formal backing from parliament, including another package of aid to help the country get through a second lockdown.

Prime Minister Giuseppe Conte’s spending plans include about 38 billion euros ($45 billion) to shore up its virus-ravaged economy, according to a draft. About 400 million euros will be set aside to buy coronavirus vaccines and other drugs. Other measures include support for female employment and investment in the health sector.

“We are seeing the light at the end of the tunnel,” Finance Minister Roberto Gualtieri told Rai TV Tuesday. “There is time to strengthen the budget with further resources that will come from new borrowing.”

The government will need to borrow 15 billion to 20 billion euros for stimulus measures to protect families and businesses damaged by the latest round of coronavirus lockdowns. Gualtieri confirmed that the government will ask parliament for permission to expand debt but declined to give an exact amount.

Italy’s debt ratio is already set to hit 160% of output this year after huge stimulus spending to protect the economy. Borrowing costs are being kept low thanks to European Central Bank bond buying, though Italy needs to boost economic growth so it can get its fiscal situation under control.

Officials in the Finance Ministry have been calculating how much aid will be needed in the coming months to help the country through the new restrictions.

Lockdown measures similar to the ones imposed earlier this year are expected to cost the government between 40 billion and 50 billion euros, or about 3% of Italy’s output, if they last until March, Bloomberg reported earlier.

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