Italy finds $9 billion to support economy, boosts energy security

© Reuters. FILE PHOTO: People wearing face masks walk in Duomo square as the region of Lombardy becomes a ‘red zone’, going into lockdown as the country struggles to reduce the coronavirus disease (COVID-19) infections, in Milan, Italy, March 15, 2021. REUTERS/Flavi

By Giuseppe Fonte and Gavin Jones

ROME (Reuters) -Italy will approve a package of measures worth more than 9 billion euros ($8.96 billion) on Thursday to lower energy prices, increase gas output and preserve stocks ahead of the winter, a draft government decree showed.

The measures will drive up this year’s budget deficit to 5.6% of gross domestic output from 5.1% previously forecast, according to the Treasury’s annual Economic and Financial Document (DEF) published last week.

Giorgia Meloni’s new right-wing government is due to approve the decree – its first piece of economic legislation – at a cabinet meeting set to start at 18:00 GMT.

According to the draft seen by Reuters, more than half the money will be used to extend to the end of the year tax breaks and subsidies for energy-intensive firms and poor households that were introduced by the previous government and funded until November.

A cut in excise duties on petrol due to expire on Nov. 18 will be extended to the end of December.

ENERGY BILLS

Among new measures, firms will be able to settle energy bills in instalments under a scheme which includes a state guarantee in case of default on two payments, the draft shows. The guarantee will be provided by public credit export agency SACE.

The state will also forego taxation on fringe benefits paid to employees to help them with their energy bills, to the tune of 3,000 euros per worker.

On energy security, the package will commit 4 billion euros to boost gas storage ahead of the winter by allowing state-owned Gestore dei Servizi Energetici (GSE) to keep some strategic stockpiles acquired in the second half of this year.

Under a previous plan, Rome had given the GSE the 4 billion euros to buy gas and then sell it to firms before the end of this year, repaying the Treasury with the proceeds.

Due to the fall in gas prices, the government is now saying the GSE can keep the gas for its stockpiles and repay the loan by April 15 next year.

In a drive to double Rome’s gas output to 6 billion cubic metres per year, the government will grant new concessions to drill between nine and 12 miles off Italy’s Adriatic coast.

Rome also intends to raise a limit on cash payments from next year to 5,000 euros from 1,000 euros – a move which critics say will facilitate tax evasion – and curb an expensive incentive scheme for energy-saving home improvements known as the “superbonus”.

($1 = 1.0041 euros)