Italy Economic Stimulus Package

Italy’s economy has witnessed a recessive trend, especially from beginning of 2008 when whole world came under menacing effect of financial downturn. National government has declared an Italy economic stimulus package to curb this regressive fiscal status and to counter this country’s worst economic slump after World War II. This comprehensive economic stimulus package of Italy, formulated by economists, was declared by Italian economy minister Giulio Tremonti.

Economic stimulus package for Italy was designed after identifying loop-holes in various sectors of Italian economy and vulnerable areas dampening steady monetary growth. Main focus of economic stimulus package to Italy is to opt for tax breaks for companies and poorer households to ensure banks continue to lend to businesses. Italy economic stimulus package is inclusive of tax deductions worth almost 2.4 billion euros. Economic stimulus package in Italy also includes some other features like delayed payment of VAT, reduction in advance tax payments and speedy reimbursements of excess tax payments.

According to Tremonti, total value of Italy’s economic stimulus package is worth 80 billion euros. Some economists are of opinion that a significant percentage of this amount will be in form of recycling of funds that are already existing. Economic stimulus package also covers domain of mortgage rates which are lowered down to 4 percent. This well-conceived package also emphasizes on state’s responsibility of underwriting special convertible bonds issued by banks. In another attempt to solve problem of funding underwriting of bonds, Italy’s economic stimulus package states that funds for covering underwriting of bonds will be derived from spending cuts and new public debt issues. Moreover, funds for each case will be allocated on individual basis.

Italian economic stimulus package also contains additional measures including state help for Italian banks worth up to 20 billion Euros to ensure their continuous support by lending. This policy is adopted in compliance with a motive of boost Italy’s weak unemployment benefit system. According to Berlusconi, Italian government is not able to cut taxes and its ability raise spending is limited. Amount of Italy economic stimulus package would be lower than in other European counterparts like Germany and France owing to country’s large public debt. Italy’s lower house of parliament has approved this economic stimulus package and final approval from Senate is expected to be provided by February 2009.