Coronavirus continues to dominate the headlines. It makes sense as this virus created so many problems for various sectors. Unfortunately, even some of the largest economies are struggling to cope with coronavirus. Moreover, the two largest economies U.S. and China are among the countries affected by the virus. Currently, the U.S. has the largest number of confirmed cases followed by Italy. The Italian government plans to unveil another stimulus package to support the local population.
Italy has the highest number of confirmed cases outside of the U.S. At the moment, Italy is the worst-hit country in Europe followed by Spain. There are more than 105,000 cases. As a reminder, since early March Italians are able to leave their houses only to buy food and medicine. Economy activity all but disappeared in the country.
Moreover, there is no concrete date when the government will remove the restrictions. According to the Italian health minister, the government will extend the lockdown until April 13.
Last month, Italy unveiled a 25 billion euro ($27.35 billion) fiscal package to support businesses.
The Italian government and stimulus packages
The Italian government is not the only government that unveiled stimulus packages. For example, the White House and lawmakers reached a historic $2 trillion stimulus deal. The Senate, as well as Congress, already approved this bill.
The Italian government plans to unveil even larger stimulus packages according to Economy and Finance Minister Roberto Gualtieri.
It makes sense as the state of the local economy was not ideal even before the coronavirus. The purpose of such fiscal measures is to support households as well as businesses for the duration of the pandemic.
However, it won’t be easy to accomplish this goal due to Italy’s exceptionally high government debt. It is worth mentioning that, Italy is the second most indebted country in Europe after Greece.
Italy and eight other EU member states want to develop a mechanism to issue joint European debt. The governments want to use some of the money to finance some of the costs from the crisis.
Nevertheless, Germany, as well as the Netherlands and several other wealthier countries, are against so-called corona bonds. Wealthier countries believe that combining their debt with the more indebted countries is not the best solution. Firstly, this step would put their economies at greater risk. Moreover, this move would complicate the situation in the country as the local population may criticize this decision.
The European Central Bank announced a stimulus package worth $820 billion in bond purchases until the end of 2020. Moreover, the European Commission plans to allocate $40.5 billion package to boost the companies across the European Union.