By Silvia Marchetti
–Second Nationwide Lockdown to be Running Through Easter
–‘Overall Picture Remains Gloomy and Uncertain’
ROME (MaceNews) – Italy’s bond issuance program for this year will likely be slightly higher than EUR 500 billion, in line with 2020 according to ruling coalition sources.
There are roughly EUR 230 billion in maturing bonds’ rollover to be financed to which must be added total government funding needs, currently estimated at roughly EUR 150 billion but which are likely to be higher by end of this year due to the protracted COVID-19 pandemic emergency.
“Last year the initial funding target estimated at the beginning of 2020 was EUR 400 billion but we ended up closing the year with EUR 550 billion due to the pandemic outbreak. This year we could end up with the same issuance volume, possibly even higher”, said an official.
On March 15 Italy went back to a nationwide shutdown as COVID cases spike, with shops and schools closed again. The lockdown will be running throughout the Easter holidays and is expected to be lifted early April, with sources arguing that it could be further extended if the outlook doesn’t improve and the vaccination campaign keeps lagging.
“We’re somehow back to square one; last year at this precise moment we declared the first shutdown. This second lockdown will have inevitable economic repercussions and until the vaccination campaign isn’t completely done and cases rise we’ll always be in a situation in which we face a constant risk of new shutdowns”, said another source familiar with budget issues.
“The 2021 funding target estimate was made at the beginning of this year when things appeared rosier following the arrival of the first vaccines and the fact that European pandemic direct aid is on its way, but truth is the overall picture remains gloomy and uncertain”.
Italy is expected to get some EUR 190 billion in EU aid through the recovery fund aimed at supporting member states in kickstarting the recovery, divided into grants and loans. The figure is slightly below initial expectations of Rome securing over EUR 200 billion in financial help from Europe.
According to sources a first tranche of these European funds, roughly 13% amounting to EUR24 billion, could be “hypothetically” available by end of this summer. Member states need to forward by April 30 their recovery plan defining key investment sectors and projects, which must be thoroughly vetted by the European institutions before any green light is given.
“The European Commission has eight weeks to make its evaluation, once that is made, the plans are forwarded for approval to the European council which will then have another four weeks to make its final decision. Add to that the inevitable bureaucratic procedures and the timeframe could be longer” said a source.
Italy’s government is expected to clear in coming days a decree aimed at further supporting ailing families, workers and firms hit by the pandemic with a total impact of roughly EUR32 billion raised through more deficit spending.
“This extra deficit funding was proposed by the previous government of premier Giuseppe Conte and approved by parliament at the end of January. If the pandemic emergency protracts we’ll be needing more money to support the economy”, said an official.
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Contact this reporter: silvia@macenews.com
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