By Silvia Marchetti
ROME (MaceNews) – Italy’s government is expected to extend key pandemic state-backed guarantees for private investments and a loans payment moratorium by Friday, according to ruling coalition sources.
Both measures, set-up in the wake of the COVID-19 crisis to help struggling firms’ and families access credit, are to due to expire in June. The extension is likely to be approved through a special decree aimed at furthering strengthening the economy alongside other key pro-growth measures worth total EUR40 billion.
“It is crucial to keep supporting liquidity and access to credit, particularly in this critical phase as Italy is finally exiting from the pandemic surge thanks to the vaccination campaign. More firms apply for the fund’s state guarantees to obtain bank loans almost on a daily basis, and families with a mortgage must be helped ,” said an official.
The state guarantees tap into an emergency fund aimed at supporting small and medium enterprises’ investments which was boosted last year at the outbreak of the COVID pandemic. The public guarantees scheme, alongside the loans payments freeze, have already been extended and strengthened with additional resources in December.
“This will be our third extension, and it is in line with more lenient European rules on state aid and liquidity measures”, said an official. Sources said technical details were being finalized, particularly whether to fully or partially extend both measures by covering up for only a part of the loan or up to a certain amount.
So far total state guarantees issued for bank loans subscribed by firms and professionals stand at roughly EUR 162 billion, while the loans payment moratorium totals EUR157 billion, with over 1.4 million firms and families benefiting from the freeze.
It is likely that an extension of the state-backed guarantees and loans freeze will be of another 6 months, up to year-end, with the possibility of another stretch if warranted.
“More pro-growth measures aimed at supporting struggling firms, families and professionals are on their way. Signs of a shy recovery are finally underway and we cannot afford to stop helping the economy and banking sector now”, said another official.
Financial sector sources argued that progress so far made in curbing the volume of bad loans sitting on banks’ balance sheets – down to net EUR20 billion, the lowest level in years – would be squandered if the state guarantees were lifted and loans payment rebooted.
“It’s obvious that without public support of this kind all loans currently subscribed, and future ones, would automatically become non-performing overnight due to the pandemic impact. COVID-19 will trigger an increase in bad loans for years to come, so safety nets must be kept in place”, said a banking source.
ROME (MaceNews) – Italy’s government is expected to extend key pandemic state-backed guarantees for private investments and a loans payment moratorium by Friday, according to ruling coalition sources.
Both measures, set-up in the wake of the COVID-19 crisis to help struggling firms’ and families access credit, are to due to expire in June. The extension is likely to be approved through a special decree aimed at furthering strengthening the economy alongside other key pro-growth measures worth total EUR40 billion.
“It is crucial to keep supporting liquidity and access to credit, particularly in this critical phase as Italy is finally exiting from the pandemic surge thanks to the vaccination campaign. More firms apply for the fund’s state guarantees to obtain bank loans almost on a daily basis, and families with a mortgage must be helped ,” said an official.
The state guarantees tap into an emergency fund aimed at supporting small and medium enterprises’ investments which was boosted last year at the outbreak of the COVID pandemic. The public guarantees scheme, alongside the loans payments freeze, have already been extended and strengthened with additional resources in December.
“This will be our third extension, and it is in line with more lenient European rules on state aid and liquidity measures”, said an official. Sources said technical details were being finalized, particularly whether to fully or partially extend both measures by covering up for only a part of the loan or up to a certain amount.
So far total state guarantees issued for bank loans subscribed by firms and professionals stand at roughly EUR 162 billion, while the loans payment moratorium totals EUR157 billion, with over 1.4 million firms and families benefiting from the freeze.
It is likely that an extension of the state-backed guarantees and loans freeze will be of another 6 months, up to year-end, with the possibility of another stretch if warranted.
“More pro-growth measures aimed at supporting struggling firms, families and professionals are on their way. Signs of a shy recovery are finally underway and we cannot afford to stop helping the economy and banking sector now”, said another official.
Financial sector sources argued that progress so far made in curbing the volume of bad loans sitting on banks’ balance sheets – down to net EUR20 billion, the lowest level in years – would be squandered if the state guarantees were lifted and loans payment rebooted.
“It’s obvious that without public support of this kind all loans currently subscribed, and future ones, would automatically become non-performing overnight due to the pandemic impact. COVID-19 will trigger an increase in bad loans for years to come, so safety nets must be kept in place”, said a banking source.
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Contact this reporter: silvia@macenews.com.
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