Italy will lend more fiscal and financial support to its business sector crippled by the COVID-19 induced national lockdown in place since March 9. The added support will be included in a new $60 billion stimulus package dubbed "Relaunch-Italy" to be unveiled this week.
Italy's government is on the verge of launching these new measures to support struggling companies even as it eases its harsh lockdown and social distancing rules that appear to be defeating the spread of the disease. These measures include tax incentives and hybrid bonds while boosting access the European Recovery Fund in the second half of the year, according to Economy Minister Roberto Gualtieri on Sunday.
"The State has the duty to intervene to defend and support workers and firms. Nobody wants to state-direct the economy but interventions that protect and at the same time stimulate the productive system are needed," said Gualtieri to newspaper Il Messaggero.
Gualtieri said the government will support medium and large companies in need in the form of "equity or hybrid capital instruments." The government will deposit $54 million for this purpose. The amount will be allocated and managed by state lender, Cassa Depositi e Prestiti (CDP).
Small and medium-sized companies, the backbone of Italy's $2.01 trillion economies, will be given access to tax incentives so they can increase capital. There will also be state-backed guarantees and access to state aid in the form of hybrid bonds. Gualtieri said the government won't be involved in decision making in companies that decide to access this financial support.
"This government sees the vitality of Italian companies as absolutely key and we all want them to stay at the heart of our economy," noted Gualtieri.
On April 9, the Italian government adopted the Liquidity Decree providing urgent measures supporting access to liquidity and financing for Italian companies hammered by COVID-19 and increasing the government's golden power rules. In March, the government unveiled a $27 billion package to help the economy cope with the pandemic.
"We are working to make the (European Recovery Fund) operational in the second half of 2020 and big enough to contribute in a significant way to the re-launch of the economy...," said Gualtieri.
The latest stimulus will be included in the new $60 billion "Relaunch-Italy" spending package. To be announced by government decree, Relaunch-Italy will help firms with grants and tax breaks. There will be handouts that will allow families to pay for childcare and holidays and also funds for unemployment benefits. Relaunch-Italy, however, will push the country's budget deficit this year to 10.4% of GDP, the highest since the early 1990s.
