Italy debates new virus recovery plan

10 January, 2021 12:00 AM printer

ROME: Italy's governing parties will meet Friday to discuss the latest plans to spend billions of euros in EU post-virus recovery funds after initial proposals provoked a crisis in the coalition.

The plan is worth 222 billion euros, most of it from a European Union fund to help address the economic impact of the coronavirus pandemic, which has killed more than 77,000 people in Italy, reports AFP.

Reflecting the strain on the country's economy and public finances from the pandemic, Italy's public deficit reached 9.4 percent of gross domestic product in the third quarter of 2020, the national statistics agency Istat said Friday -- up from 2.2 percent in the same period in 2019.

For the year 2020 as a whole, the government forecasts the deficit -- the shortfall between spending and revenues -- will be 10.8 percent of GDP, against 1.6 percent in 2019.

Under the leaked spending plans, 70 percent of the new funding will go into investment and 21 percent for tax incentives and other hand-outs.

The additional spending is expected to boost GDP by three percentage points.

The plan allocates 18 billion euros to the cash-strapped health service -- up from nine billion in the original plan -- with a further eight billion for tourism.

Other sectors to be prioritised are the transition to a greener economy (67 billion euros), education and research (26 billion euros) and transportation projects (32 billion euros).

Prime Minister Giuseppe Conte had previously faced criticism for not allocating enough money for projects addressing long-term structural issues.

The leader of the small but pivotal Italia Viva party, former premier Matteo Renzi, has threatened to pull out of the ruling coalition over this and other issues, risking its collapse.

Conte will on Friday meet with the heads of delegations from the coalition partners, including Italia Viva, the populist Five Star Movement (M5S) and the centre-left Democratic Party (PD).