Economy

Italy’s Draghi offers new aid package, says he won’t return as prime minister

Italy’s Draghi offers new aid package, says he won’t return as prime minister
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By Giuseppe Fonte and Giselda Fagnoni

ROME (Reuters) – Italy on Friday approved an aid package of about 14 billion euros ($14 billion) to protect businesses and households from rising energy costs, perhaps in outgoing Prime Minister Mario Draghi’s last major action ahead of the Sept. 25 election.

The latest measures come on top of the 52 billion euros already budgeted since January to ease Italy’s energy crisis.

It will be financed from higher value-added tax revenues as a result of higher electricity and gas bills and adjustments to the state budget, without resorting to the additional borrowing requested by some parties.

Draghi told reporters that the government was “helping families and businesses without jeopardizing public finances and causing tensions in the markets.”

Italy is confirming its budget deficit target for 2022 at 5.6% of national product set in April, Italian Economy Minister Daniele Franco said at a press conference alongside Draghi.

Despite the worsening economic outlook due to the impact of the war in Ukraine, Draghi said he still sees no sign of stagnation in Italy.

He also said that he is not available to take over the premiership for another term, whatever the outcome of the elections in which he was not a candidate.

Some centrist parties are pressing the former European Central Bank chief to continue as prime minister if the vote does not produce a clear winner.

Under the new aid package, Rome reinforces and extends existing tax breaks that help companies pay electricity and gas bills until November.

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A new scheme of government guarantees will help companies with liquidity problems due to rising energy costs.

A draft government decree seen by Reuters showed that the state export agency SACE would offer free guarantees on loans at a rate no higher than that paid by government bonds of the same maturity.

The funding is intended to help pay energy bills issued in the last quarter of 2022.

Among a host of other measures, the plan envisages a one-time 150-euro grant for 22 million workers and retirees with an annual income of less than 20,000 euros. The fuel tax cut at the pump will remain in effect until November instead of October 17.

To deter companies from closing factories in Italy, the government decree cancels any government benefits already received if they move production abroad and fire 40% or more of their employees, Industry Minister Giancarlo Giorgetti said.

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