Italy Plans Up to 45 Billion Euros of Extra Deficit Spending

Italy’s government plans to seek approval for as much as 45 billion euros ($54 billion) of additional borrowing this year to keep the economy afloat as the coronavirus lockdown drags on, according to two people familiar with the matter.

Prime Minister Mario Draghi’s cabinet discussed the plan and the country’s economic situation at a cabinet meeting Wednesday, according to a note shared by his office, but the government postponed a decision on the details of the extra deficit request.

The government is set to seek about 40 billion euros of extra borrowing to support companies and workers, as many businesses remain shuttered, according to people familiar with the matter, who asked not to be named discussing confidential deliberations. The government could also seek an extra 5 billion euros for an investment fund that would grow to 30 billion euros in coming years, the people said.

Italy Plans Up to 45 Billion Euros of Extra Deficit Spending

The Treasury and prime minister’s office are still working out final details and are expected to reach a decision Thursday when the cabinet will meet again, the people said.

Spokesmen for Draghi and the Treasury both declined to comment. Daily Corriere della Sera reported earlier that the total could reach 45 billion euros.

The economy of Italy, one of the first countries hit by the coronavirus, has been battered by the pandemic, with output falling almost 9% last year. The current government and its predecessor have spent over 130 billion euros so far to support the economy, pushing public debt to 155.6% of gross domestic product.

Focus on Elderly

Draghi, the former head of the European Central Bank, has been ramping up pressure on the country’s regional governments to focus their vaccination drives on elderly citizens, in a bid to speed up a campaign seen as vital to reopening the economy. The government is struggling to reach a target of 500,000 shots a day by the end of the month.

Italy Plans Up to 45 Billion Euros of Extra Deficit Spending

A budget outline document to be discussed by the government this week points to a 2021 deficit of between 10% and 11%, financial daily Il Sole 24 Ore reported earlier Wednesday.

Italy started easing some lockdown restrictions weighing on the economy earlier this week and has inoculated an average of about 280,000 people a day in the last seven days, according to the Bloomberg Vaccine Tracker.

The country is targeting about 315,000 daily vaccinations between April 16 and April 22, according to a statement Monday by General Francesco Paolo Figliuolo, tapped by Draghi to head the pandemic emergency response.

In line with other EU countries, Italy is holding vaccine doses produced by Johnson & Johnson until a ruling from the U.S. Food and Drug Administration, according to people familiar with the plan. Distribution of the J&J vaccine has been paused in much of the U.S. and Europe pending a review of the development of rare blood clots in several women.

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