Italy Government to Seek Parliament Approval for Larger Deficit

(Bloomberg) -- Italy's government will ask parliament to approve another increase in the deficit later this month to pay for vaccines, healthcare, and support for companies and workers, according to Finance Minister Roberto Gualtieri.

The request will be for 24 billion euros ($29 billion), Gualtieri said in an interview with the Corriere della Sera newspaper published Sunday. That's equivalent to 1.5% of Italy's gross domestic product and the government hopes that this “will be the last time” they need to ask for more money, he said.

This will be the fifth request for a larger deficit the government has made since the first national lock down in March last year. The extra spending is on top of the current projection of a deficit equal to 7% of GDP in 2021.

The government will soon revise its economic and debt forecasts for this year, but “there is no reason to foresee a deficit-to-GDP ratio in double digits this year,” Gualtieri said in the interview.

The ruling cabinet is likely to meet Tuesday to discuss how to spend money from a European Union recovery package, according to local media. The governing coalition has been fighting over how much of the money to use, with former prime minister Matteo Renzi criticizing current leader Giuseppe Conte over his plans for the money.

Renzi threatened to withdraw his party's support from the coalition, which could trigger a confidence vote in Conte's government in the parliament.

The national government is preparing to extend movement restrictions and a night-time curfew for another month from Jan. 16 on concerns of a third wave of the pandemic. New variants of the virus have been detected in Veneto, one of the most affected northern regions. A new decree will be discussed by the cabinet later this week, according to local media.