December 2, 2022

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

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© 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 approved a package of measures worth 9 billion euros ($8.96 billion) on Thursday to soften the impact of high energy prices, increase gas output and preserve stocks ahead of the winter.

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 approved the decree containing the new norms – its first piece of economic legislation – after a two-hour cabinet meeting.

The Treasury said in a statement that more than a third of the 9.1 billion euros deployed would be used to extend tax breaks for firms, mainly energy-intensive ones, introduced by the previous government.

These were funded up to November and will be prolonged until the end of the year. A cut in excise duties on petrol due to expire on Nov. 18 will also be extended to the end of December.

Among new measures, companies will be able to settle energy bills in up to 36 instalments under a scheme which includes a state guarantee in case of default on payments.

The guarantees will be provided by public credit export agency SACE on condition that the benefiting companies do not pay dividends or buy back shares, the Treasury said.

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

GAS STOCKPILES

To strengthen energy security, the package commits 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 at a discount before the end of the 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 sell it by end-March 2023.

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

It also raises 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 curbs an expensive incentive scheme for energy-saving home improvements known as the “superbonus”.

The superbonus will remain in place, but for renovations carried out in 2023 the government will pay 90% of the bill instead of 110% at present.

($1 = 1.0041 euros)