Italian govt approves "growth decree" to kick start economy

Source: Xinhua| 2019-04-05 06:17:13|Editor: Shi Yinglun
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ROME, April 4 (Xinhua) -- The Italian government has approved a so-called "growth decree" designed to kickstart the country's shrinking economy, Deputy Prime Minister Luigi Di Maio announced late on Thursday.

"This decree will have a positive impact on our growth, making it sustainable," Di Maio, who leads the populist Five Star Movement and who also serves as minister of labor and economic development, told reporters in televised comments.

Among the measures Di Maio listed are protections for the "Made in Italy" brand to defend it against counterfeiting, tax breaks on industrial warehouses and investments in capital goods, and incentives for highly educated Italians who live abroad, the so-called "brain drain", to return home.

The decree also contains a measure allowing the government to convert a bridge loan made to struggling carrier Alitalia into equity. "As I had promised, the government will be able to acquire shares in Alitalia," Di Maio said.

The 73-page, 34-article growth decree also allocates 500 million euros to municipalities "for investments in energy efficiency and sustainable development," including the installation of renewable energy sources and renovating schools and other public buildings, and extends a state-guaranteed fund for first-time home-buyers that had been set up by the previous center-left government in 2013.

Di Maio said the growth decree does not contain a controversial 1.5-billion-euro fund to reimburse up to 100,000 euros to small investors who lost money in banking crises in recent years.

Prime Minister Giuseppe Conte will meet with small investors who claim they were defrauded by unscrupulous banking advisors on Monday, Di Maio said.

Critics of the decree, a draft of which was circulated online, warned that Italy needs a far more ambitious package if it is to turn its stagnant economy around.

In its latest report on the economy, Italy's Confindustria business lobby estimated zero percent growth for the country's gross domestic product (GDP) in 2019, calling on the government to "urgently make a change in the national economic policy".

"Over the past six months, public debt has ballooned more than it ever has before," European Parliament President Antonio Tajani, a member of the opposition center-right Forza Italia party, told RAI News 24 public broadcaster. "We need a drastic cure to restart our economy."

The Organisation for Economic Co-operation and Development (OECD) said on Monday that it sees Italian GDP "contracting by 0.2 percent in 2019" and that the government's budget, while it "rightly aims to help the poor" with generous welfare measures, will have a modest impact in terms of reducing social inequalities, while increasing the country's already bloated public debt.

"Low productivity growth and wide social and regional inequalities are long-standing challenges which need to be tackled vigorously," the OECD said in a statement. "The public debt as a share of GDP remains high, at 134 percent, and a source of risks."

Also on Thursday, Bloomberg business news agency reported that the Italian Treasury is set to slash its growth forecast for this year to just 0.1 percent -against a previous forecast of 1 percent growth - and to raise its projected budget deficit to 2.3 percent or 2.4 percent of GDP, compared with the previous forecast of 2.04 percent agreed on with the European Commission after laborious negotiations last year.

Bloomberg cited two "senior officials with knowledge of the draft outlook" in the report. The draft, or the economic and finance document, goes to the cabinet for approval on April 10.

This would appear to contradict the government, which has so far discounted all negative estimates of Italy's growth, promising that its policies - a mix of welfare, tax cuts and tax incentives - will be enough to stimulate the economy, which entered a recession in the last two quarters of 2018.