Home NewsCommodities News Italy readies $7 billion package to curb energy prices, help firms By Reuters

Italy readies $7 billion package to curb energy prices, help firms By Reuters

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Italy readies $7 billion package to curb energy prices, help firms By Reuters


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© Reuters. Electric masts are seen at sunset near Milan, Italy, on February 21, 2016. REUTERS/Stefano Rellandini

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Giuseppe Fonte

ROME (Reuters) – Italy will unveil a new stimulus package worth up to 7 billion euros ($7.35 billion) on Monday to stem soaring energy prices and help companies deal with the economy from the Ukraine war, unions said after a meeting Influence and government.

The new stimulus comes on top of about 15 billion euros already budgeted since January to help businesses and households reduce electricity, gas and petrol prices

Italy’s two biggest banks have sizable exposure to Russia and are heavily reliant on Moscow for energy needs, and their growth prospects have deteriorated sharply since Russia invaded Ukraine on February 24.

Rome plans to extend a 25-cent excise tax cut on fuel prices at petrol stations until July 8, or it will expire on Monday, according to a draft decree seen by Reuters.

Taking advantage of the EU’s temporary relaxation of state aid rules, the government will also provide state guarantees for bank loans and grants of up to 400,000 euros to help thousands of companies hit by Russian sanctions.

The plan has disappointed unions. “It’s not enough,” said Maurizio Landini, head of CGIL, Italy’s largest trade union federation.

Rome aims to fund most of the new measures without additional borrowing, thanks to a 6 billion euro budget headroom announced in April on the back of higher-than-initial tax revenue and lower-than-expected spending.

Despite calls from coalitions and unions for more borrowing to stem the recession, the Treasury Department wants to stick to a goal set in the fall to reduce this year’s budget deficit to 5.6 percent of national output from 7.2 percent in 2021.

Prime Minister Mario Draghi will also unveil plans to reduce Italy’s dependence on Russian gas and speed up the rollout of renewable energy, his office said.

Draghi will hold a news conference after an emergency meeting of EU energy ministers to discuss the EU energy situation.

Italy’s plan includes restarting some coal-fired power plants and rationing gas supplies if necessary, Italian government officials told Reuters.

The EU meeting came after Moscow stopped gas supplies to Poland and Bulgaria after refusing to pay for Russian gas in rubles.

(1 USD = 0.9507 EUR)

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