ROME (Reuters) – Italy will target a budget deficit of around 10% of national output in 2020, and the gap will remain above 3% in 2021, a senior official said, as it readies a new stimulus package to soften the economic impact of the coronavirus crisis.
Until the outbreak, 3% of gross domestic product was the limit for European Union countries under the bloc’s budget rules. The EU has suspended this threshold to allow its members to spend more to fight the pandemic.
Italy, which has been one of the hardest hit in the world by COVID-19, will present new multi-year economic forecasts later on Thursday or on Friday.
Asking not to be named, the source told Reuters the government would seek authorisation next week from parliament for a new spending package that will increase the deficit by 55 billion euros ($59.5 billion), driving it to about 10% of gross domestic product or slightly above.
“The deficit target will remain above the EU’s ceiling of 3% next year,” the source added.
Italy began the year with a 2020 target of 2.2% after registering 1.6% in 2019, its lowest in 12 years.
The public debt, which tops 2.4 trillion euros and already is one of largest in the world, is targeted to jump above 155% of GDP this year from the 134.8% reported in 2019.
(Reporting by Giuseppe Fonte, editing by Gavin Jones and John Stonestreet)
