Italy preparing new $5.5 bln euro package to offset costly energy bills, sources say

The right-wing administration led by Prime Minister Giorgia Meloni earmarked over 21 billion euros in its 2023 budget to soften the impact of energy costs on the euro zone's third largest economy in the first quarter of this year. Rome now wants to extend and review these measures in a decree expected to be approved by the cabinet on March 28, the sources said, asking not to be named due to the sensitivity of the matter.

Italy is preparing a new package of measures worth around 5 billion euros ($5.5 billion) to help businesses and families cope with costly energy bills which it plans to announce next week, two government sources told Reuters on Thursday. The right-wing administration led by Prime Minister Giorgia Meloni earmarked over 21 billion euros in its 2023 budget to soften the impact of energy costs on the euro zone's third largest economy in the first quarter of this year.

Rome now wants to extend and review these measures in a decree expected to be approved by the cabinet on March 28, the sources said, asking not to be named due to the sensitivity of the matter. As part of the package, the Treasury plans to extend until June an existing bonus aimed at cutting energy bills paid by low-income households.

Moreover, Rome intends to change a tax break to cut energy costs for firms, making it available only if the price of methane exceeds a certain threshold still to be defined. The Treasury believes it can fund the decree through savings stemming from the previous 21 billion euro package so as not to weigh on the public deficit, one of the sources said.

Gas prices have fallen in recent months, with the Dutch TTF hub hovering around 41 euros per megawatt hour (MWh), sharply down from 73 euros in early 2023. Higher-than-expected gross domestic product (GDP) growth in 2023, which is now estimated by the Treasury at

almost 1% from the 0.6% target set in November, also boosts tax revenues and helps fund the scheme.

Italy last November set a budget deficit goal of 4.5% of GDP, down from 8% reported in 2022. The economy ministry is due to update in April its growth forecasts and public finance targets in the Economic and Financial Document (DEF).

($1 = 0.9170 euros)

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