Italy’s government is readying new measures to support companies struggling due to the coronavirus crisis, including tax incentives and hybrid bonds, and aims to access the European Recovery Fund in the second half of the year, Economy Minister Roberto Gualtieri said on Sunday (10 May).
“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,” Gualtieri told newspaper Il Messaggero in an interview.
Italy, one of the countries hardest hit by the epidemic with more than 30,000 deaths, expects its economy to contract by at least 8% this year, the worst recession since World War II.
Gualtieri said that the government would grant support to medium and large companies in need in the form of “equity or hybrid capital instruments”, with €50 million allocated and to be managed by state lender Cassa Depositi e Prestiti (CDP).
Smaller companies, the backbone of Italy’s economy, will have access to tax incentives to increase capital, with state-backed guarantees and access to state aid in the form of hybrid bonds, he said, adding that the government would not be involved in companies’ decision making if they decided to access such 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,” Gualtieri said.
Last month the Italian government approved a package of emergency measures offering liquidity and bank loans to companies hit by the health emergency.
“We always said that state-backed liquidity is necessary but not sufficient,” he added.
The new measures are expected to be included in a new spending package – dubbed “Relaunch-Italy – due to be unveiled in coming days. It will push the country’s budget deficit this year to 10.4% of gross domestic product, the highest since the early 1990s.
The 55-billion euro plan will help firms with grants and tax breaks but will also offer handouts to families to pay for childcare and holidays and funds for unemployment benefits, according to a draft decree seen by Reuters.
Gualtieri said that along with the measures needed to help the economy bounce back after the coronavirus emergency, the government aimed at simplifying administrative procedures and cutting down bureaucracy.
In March the ruling coalition already approved a €25 billion package to help the economy cope with the outbreak.
“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…,” Gualtieri added.
The minister said last week that he was confident that the fund would make at least 100 billion euros available to Italy.