Italy Doubles Stimulus to Fight Virus Fallout to $8.4 Billion
Italy will double the amount planned to help contain the impact of the coronavirus outbreak on the economy to 7.5 billion euros ($8.4 billion.)
The announcement marks a dramatic escalation in the government’s response, which has so far included measures such as a nationwide closure of schools and a ban on public events.
With its economy already at risk of recession before the outbreak, the crisis has all but paralyzed business activity in the country’s rich northern regions — home to major companies including carmaker Fiat Chrysler Automobilies NV. It has also piled more pressure on the country’s fragile governing coalition, with coalition partners demanding ever-higher spending.
The funds will be used to “help families and businesses tackle this emergency which is not just a health one but also an economic one,” Prime Minister Giuseppe Conte said at a joint press conference with Finance Minister Roberto Gualtieri in Rome Thursday.
“No one must lose their job because of the coronavirus,” Gualtieri said.
The extra spending will lead Italy to break its budget deficit commitments by 6.35 billion euros, or 0.35 percentage point of gross domestic product. Italy is already in talks with the European Commission to be granted the necessary flexibility.
“We listen to the European Commission constantly, we are not making a leap in the dark,” Conte said. “We can already say the Commission is willing to move toward us and understand the emergency.”
Details of the stimulus program will be presented next week, and will have to receive parliamentary approval, according to the finance minister. The plan will include a suspension of mortgage payments for companies hit by the crisis, extra resources for health and emergency services, and income support.
What is missing, according to Carlo Alberto Carnevale Maffe, a professor of business strategy at Milan’s Bocconi University, are “measures which can mobilize much bigger private investment.”
With more than 3,000 cases and over 100 dead, Italy is preparing for a prolonged period of disruption. Sweeping containment measures announced Wednesday include holding sporting events behind closed doors and the advice to elderly people to avoid leaving home unless necessary. The school closure can be extended beyond its current plan of March 15, Conte said.
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