Italy: Decree okayed to shield economy from coronavirus

ROME

Italy on Monday approved a much-awaited €25 billion ($27.9 billion) package of economic measures to help Italian businesses and families cope with the fallout of the prolonged coronavirus emergency.

The “Heal Italy” decree includes over €10 billion to support workers at risk of losing their jobs due to the outbreak, with incentives extended to self-employed and precarious workers. For these “weaker” categories, the government will provide a one-off contribution of €600.

The decree also boosts funds to help firms pay workers temporarily laid off due to the forced lockdown. Families with children, forced to skip school due to the outbreak, will be helped with longer parental leaves and so-called “babysitter” vouchers.

The other big tranche of the measures, for up to €3.5 billion, will be devoted to supporting the country’s healthcare system, which – despite its usual efficiency – is straining to handle the unprecedented epidemic, which has so far has infected more than 20,000 people, with a death toll of over 2000 – the largest in Europe.

“We know that this decree won’t be enough. But this is our first response,” Italian Prime Minister Giuseppe Conte told a televised press conference, calling the measures “powerful.” He also pledged that the government will be ready to follow up with new ones, starting next month.

The package also includes a postponement of fiscal deadlines, a suspension in mortgage payments, and stronger public guarantees for banks, in a move that – according to government forecasts ­– will end up injecting new liquidity in the credit market for up to €340 billion.

Italy’s fragile economy – weighted by a heavy public debt – was already facing the risk of a new recession this year. Economists have warned the impact of the coronavirus could be fatal for the country’s economic system.

Economy Minister Roberto Gualtieri said on Monday that the decree used all the additional financial flexibility provided by the European Union due to the virus emergency.

The new measures will push Italy’s closely watched budget deficit well above the EU threshold of 3% of gross domestic product, up from the 2.2% forecast last autumn.