Rome, April 16 : Italian Prime Minister Mario Draghi's cabinet has passed additional borrowing worth 40 billion euros ($47 billion) to finance a new package of measures to help businesses and households hit by the coronavirus pandemic.
The package was signed off separately in a cabinet meeting on Thursday, along with the Economic and Financial Document (DEF) 2021, the spending plan outlining the country's public finance and economic strategies in the mid-term, reports Xinhua news agency.
The new stimulus will push the country's budget deficit target to 11.8 per cent of the GDP this year from a previous 8.8 per cent projected, and the public debt to 159.8 percent, according to the DEF.
The move was in line with that of other European Union (EU) states, such as Germany in March, and with the recommendations of the International Monetary Fund (IMF), which on Wednesday called on eurozone countries to boost their spending to help their economies cope with the effects of the lockdowns and other restrictions.
The measures will be detailed in a decree later this month, yet they should include unemployment benefits and income support for workers and households, plus a new tax relief for young couples taking out a mortgage to buy their first home, according to Italy's ANSA news agency.
Like all other EU countries, Italy will have to submit its recovery plan to Brussels by the end of April in order to receive its allotted portion (209 billion euros) of a 750 billion euro fund provided by the Next Generation EU program.
The DEF also showed growth projections at 4.5 per cent this year, at 4.8 per cent in 2022, and 2.6 per cent and 1.8 per cent in 2023 and 2024, respectively.
However, in a worst-case scenario in which the coronavirus vaccination campaign had a limited impact, the Italian government also included a lower growth forecast for this year and the next -- 2.7 per cent and 2.6 per cent, respectively.
As for the deficit/GDP ratio, it should drop from 11.8 in 2021 to 5.9 per cent in 2022, 4.3 per cent and 3.4 per cent in the following two years, falling again under 3 per cent, a threshold the EU asks member states to respect in normal circumstances, only in 2025.
The economic and financial plan will now go to Parliament, where it has to be approved by the lower house (discussion scheduled on April 22) and Senate before the end of the month.
The Italian economy has been severely hit by the pandemic, and its GDP fell by 8.9 per cent last year, according to the National Institute of Statistics.