Italy expects at least 100 billion euros from EU recovery fund

Economy Minister Roberto Gualtieri said on Tuesday he was confident the new European Recovery Fund will make available at least 100 billion euros ($109 billion) for Italy to help its economy bounce back from the coronavirus crisis.

European leaders are negotiating over the creation of a fund worth at least 1 trillion euros to boost economies hit by the pandemic.

“I am confident that at least 100 billion euros could be used for our country via the Recovery Fund,” Gualtieri told the Italian senate.

Italy wants the fund to provide mainly grants to EU governments, rather than just loans and hopes it can be activated sometime between June and September.

“We believe that we cannot wait until 2021 to have this tool effective,” Gualtieri said.

He added that in addition, Italy hopes to get 20 billion euros from the new European scheme up to mitigate unemployment risks and 40 billion euros of lending from the European Investment Bank.

A further 36 billion euros will be available if Italy opts to apply for a precautionary credit line ensured by the euro zone’s bailout fund, the European Stability Mechanism (ESM).

However, the co-ruling anti-establishment 5-Star Movement has told the government to steer clear of the ESM, saying it would undermine Italy’s sovereignty because of possible conditions attached to any loans.

While it awaits resources from Europe, Rome is trying to stimulate its economy with a series of domestic spending packages.

This week Prime Minister Giuseppe Conte will unveil the latest of these, worth 55 billion euros, which will push the country’s budget deficit this year to 10.4% of gross domestic product, the highest since the early 1990s.

Labour Minister Nunzia Catalfo said on Monday that 16 billion euros of the package, to be passed by emergency decree, would help companies pay workers temporarily laid off because of the lockdown to try to curb the coronavirus.

All firing procedures will be suspended until mid-August, according to a draft of the decree seen by Reuters, in an effort to uphold a public promise by Gualtieri that “nobody must lose their job because of the coronavirus”.

Among other measures, the government will cut electricity bills and reimburse three months of rent paid by firms.

The Treasury is also looking at a scheme to provide state lender Cassa Depositi e Prestiti (CDP) with an equity fund to invest in core companies in difficulty and protect them from possible foreign predators.