Italy to Extend Furlough Program by 18 Weeks, Draft Budget Shows
Italy to Extend Furlough Program by 18 Weeks, Draft Budget Shows
(Bloomberg) -- Italy’s 2021 budget will focus on extending a furlough program for workers and a moratorium on loan and mortgage payments, as the government battles to restart an economy threatened by a resurgence of the coronavirus.
The administration of Prime Minister Giuseppe Conte is still looking for 5 billion euros ($5.9 billion) in extra funding to avoid overshooting its deficit target for 2021, according to a draft of budget documents seen by Bloomberg. The draft is subject to change amid ongoing government talks.
Furloughs for workers at companies hit by the pandemic would be prolonged for 18 weeks from Jan. 1 under the plan, at a cost of 5 billion euros next year.
The current moratorium on loan and mortgage payments would also be extended another six months at a cost of 700 million euros, according to the draft. A proposed tax on digital services, which has been criticized by the U.S. government, would be delayed to 2022 at a cost of 700 million euros.
Commission Deadline
Conte’s government is due to submit a draft of its budget plan to the European Commission this week, along with more details on how it plans to spend Italy’s portion of EU recovery fund grants and loans. Rome is set to receive the lion’s share, as much as 209 billion euros over the course of the program.
The Treasury declined to comment on the specifics from the draft, saying that Finance Minister Roberto Gualtieri has already signaled that furloughs and other programs would be extended.
The government’s worst-case scenario is for gross domestic product to fall 10.5% this year and expand only 1.8% in 2021, according to its budget outlook last week. The administration’s main forecast is for a 9% contraction this year and 6% growth in 2021.
Rome plans to spend 23.5 billion euros on tax reform in 2021-2023, according to the draft. The deficit target for 2021 is currently 123 billion euros.
Funds earmarked from the EU’s aid package for next year include 10 billion euros in grants and 11 billion euros in loans.
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