Italy plans extra borrowing worth almost $9 billion this year and next

ROME (Reuters) – Italy plans to raise borrowing by some 8 billion euros ($8.8 billion) this year and next to fund aid measures mainly focused on cutting taxes for employees, the Treasury said.

In its Economic and Financial Document (DEF) published on Thursday, the Treasury confirmed its budget deficit targets at 4.5% of national output this year and 3.7% in 2024.

But Italy’s fiscal gap is on course for a slightly lower 4.4% in 2023 and 3.5% next year under current trends, which allows a budget leeway worth 3.4 billion euros this year and 4.5 billion in 2024.

“These resources will be used to support the purchasing power of employees in 2023, and will be allocated in 2024 to fund additional measures aimed at reducing the tax burden,” the DEF said.

After declining to the projected 3.7% of GDP next year, the deficit is seen returning to the European Union’s 3% ceiling in 2025 and falling to 2.5% the following year.

Italy’s public debt, proportionally the highest in the euro zone after Greece’s, is targeted in the DEF at 142.1% of GDP this year, but is set to decline to 141.4% in 2024, to 140.9% in 2025 and to 140.4% in 2026.

($1 = 0.9075 euros)

(Reporting by Giuseppe Fonte; Editing by David Holmes)