Italy approves new stimulus package to help virus-hit economy

© Reuters. FILE PHOTO: The spread of coronavirus disease (COVID-19) in Naples

MILAN (Reuters) – Italy approved a new stimulus package in its 2021 budget to foster an economic rebound after the recession caused by the coronavirus crisis, a government statement said on Sunday after a late-night cabinet meeting .

The ruling coalition, led by the anti-establishment 5-star movement and the center-left PD party, has approved a draft of the stimulus package, a government source said, leaving final details to be clarified.

Among the measures to support the health and education system, the government will set up a fund of 4 billion euros ($ 4.7 billion) to compensate the companies most affected by the coronavirus lockdowns.

The budget also expands temporary layoff programs for companies with workers on leave and offers tax breaks to support employment for the poor in the south of the country.

Italian Prime Minister Giuseppe Conte is also expected to announce new measures on Sunday to curb the steady rise in COVID-19 cases in recent weeks.

One of the European countries most affected by the pandemic, Italy forecasts an economic contraction of 9% for 2020 and a budget deficit equivalent to 10.8% of gross domestic product.

The expansionary program is expected to keep Italy’s deficit next year at 7% of economic output, up from 5.7% forecast in April, reflecting additional spending.

Italy forecasts economic growth of 6% in 2021.

Next year, expansion measures will total € 40 billion, including cheap loans and grants from the European Union’s Stimulus Fund, Gualtieri told lawmakers this month.

(1 USD = 0.8534 euros)

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