Among measures to support the health and education system, the Italian government will set up a $4.7 billion fund to compensate companies worst hit by coronavirus lockdowns.

Restaurant's menu is seen in downtown Rome, Italy, on October 15, 2019.
Restaurant's menu is seen in downtown Rome, Italy, on October 15, 2019. (Remo Casilli/ FILE PHOTO / Reuters)

Italy has approved a new stimulus package in its 2021 budget to foster an economic rebound from the recession caused by the coronavirus crisis.

A government statement said on Sunday that the $4.7-billion package was approved at a late-night cabinet meeting.

The ruling coalition, led by the anti-establishment 5-Star Movement and centre-left PD party, agreed on a preliminary version of the stimulus package, a government source said, leaving final details to be hammered out.

Among measures to support the health and education system, the government will set up a $4.7 billion (4 billion euro) fund to compensate companies worst hit by coronavirus lockdowns.

READ MORE: Coronavirus panic grows in Italy, halts daily life and infects the economy

Temporary lay-offs

The budget also extends temporary layoff schemes for companies with workers on furlough and offers tax breaks to support employment in the poor south of the country.

One of the European countries worst hit by the pandemic, Italy has forecast a 9 percent economic contraction for 2020 and a budget deficit equating to 10.8 percent of gross domestic product.

The expansionary package is expected to keep Italy's deficit next year to 7 percent of economic output, up from a 5.7 percent forecast in April, reflecting the additional spending.

Italy has forecast economic growth of 6 percent in 2021.

Expansionary measures next year will total 40 billion euros, including cheap loans and grants from the European Union's Recovery Fund, Gualtieri told lawmakers this month.

READ MORE: Italy reports record new Covid-19 infections – latest updates

Source: Reuters