Regions

Italian prime minister Renzi to weigh new stimulus measures

April 10
7:25 PM 2015

Italian Prime Minister Matteo Renzi said on Friday he will consider new measures to stimulate growth in the coming weeks after his government passed its three-year financial and economic planning document (DEF).

When the DEF was first discussed on Tuesday, Renzi announced there would be no new spending cuts or tax increases this year. On Friday, he said the government has some 1.6 billion euros ($1.7 billion) in extra funds to spend.

"We have something set aside. We'll decide if and how to use it in the coming weeks," Renzi told reporters after a cabinet meeting. "Any ideas that are good for accompanying this phase of growth" would be considered, Renzi said.

In the DEF approved by the cabinet on Friday, the government said the economy would grow 0.7 percent in 2015 after three consecutive years of contraction, and that it would expand 1.4 percent next year against a background of improved conditions for the globaleconomy.

Lower oil prices and the European Central Bank's bond buying program, which has sent interest rates to record lows and driven the euro down against the dollar, have lifted Italy's hopes of a pickup.

Italy, the euro zone's third-largest economy, has been trapped in chronic stagnation and has barely grown in 20 years, putting its public finances under growing strain and creating tensions between Rome and European authorities in Brussels.

The deficit is forecast to fall to 2.6 percent of gross domestic product this year from 3.0 percent in 2014, and to fall progressively until reaching balance in 2018.

The deficit would decline automatically to 2.5 percent of GDP this year, according to government estimates, but the extra cash put aside by Renzi for growth measures means the figure will come in 0.1 percentage points higher.

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