Italy to present new package to support economy, energy security

© Reuters. FILE PHOTO: People wearing face masks walk in Duomo square as the region of Lombardy becomes a 'red zone', going into lockdown as the country struggles to reduce the coronavirus disease (COVID-19) infections, in Milan, Italy, March 15, 2021. REUTERS/Flavi

By Giuseppe Fonte and Gavin Jones

ROME (Reuters) - Italy will approve a package of measures worth more than 9 billion euros ($8.96 billion) on Thursday to lower energy prices, increase gas output and preserve stocks ahead of the winter, two government officials told Reuters.

The spending will drive up this year's budget deficit to 5.6% of gross domestic output from 5.1% previously forecast, according to the Treasury's annual Economic and Financial Document (DEF) published last week.

More than half the money will be used to extend to the end of the year tax breaks and subsidies for energy-intensive firms and poor households, which were introduced by the previous government and funded until November.

A cut in excise duties on petrol due to expire on Nov. 18 will also be extended to the end of December, the officials said.

On energy security, the package will commit 4 billion euros to boost gas storage ahead of the winter by allowing state-owned Gestore dei Servizi Energetici (GSE) to keep some strategic stockpiles acquired in the second half of this year.

Under a previous plan, Rome had given the GSE the 4 billion euros to buy gas and then sell it to firms before the end of this year, repaying the Treasury with the proceeds.

Due to the fall in gas prices, the government is now saying the GSE can keep the gas for its stockpiles and repay the loan next year.

The government will also expand concessions to drill between nine and 12 miles off Italy's Adriatic coast, extracting up to 15 billion cubic metres of gas over a 10-year period.

Rome plans to continue its expansionary policies in 2023, targeting a budget deficit of 4.5% of gross domestic product from a previous 3.4% estimate made in September.

The fiscal gap is targeted to fall to 3% in 2025, the ceiling set by the EU's Stability Pact before it was suspended.

($1 = 1.0041 euros)