The Council of Ministers will launch a first law decree on Saturday morning with immediate measures of economic support to the affected areas and productive sectors from the spread of the coronavirus. a first provision containing the emergency measures linked to the suspension of the payment of electricity and gas bills and the installments of bank loans, together with the Banking Association, the strengthening of the Guarantee Fund for small and medium-sized enterprises said the minister Economic Development, Stefano Patuanelli, while concern about the impact of the coronavirus on the international economy is growing.
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Bad the stock markets, the spread flies
Today the European stock exchanges have opened very badly, with Frankfurt leaving 5% on the ground, Madrid 4.4%, London and Paris 4.3%. The Milan Stock Exchange is still suffering, which fails to recover after the debacle of the past few days (-3.2%). Tensions also on government bonds: the interest differential between the BTPs and the German Bund rose to 177 basis points in the morning, the highest level since August 2019, in the midst of a government crisis. As with Italy, the risk premiums for government bonds of China and Japan, the main countries affected by the virus, also increase.
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Suspension of utility bills
The draft provides for the suspension of water, electricity, gas and even waste bills for 6 months. The Arera, in charge of the suspension, also regulates the method of payment by installments of invoices and payment notices whose terms have been suspended.
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More guarantees for businesses
In addition to the specific rules for the areas most affected, measures to support all small and medium-sized enterprises that are facing the crisis should also be included in the first package under examination by the Italian government. The provision of the Guarantee Fund for small enterprises, which underpins their bank exposure, should be increased up to € 750 million. In view of the possible liquidity crisis for smaller companies, especially in the areas most affected by the virus, the portion guaranteed by the Fund on short-term loans could also be extended, from 30 to 80%. Sace, an institution controlled by the Cassa Depositi e Prestiti which ensures exports, should instead make available another 350 million euros to guarantee companies that sell abroad.
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For exports 350 million
The decree only concerns first emergency measures, and will probably be followed by a new, more general economic support measure. The suspension of taxes cannot be the only measure said Patuanelli, advancing the hypothesis of a tax credit to compensate companies for the loss of turnover. The decree with the more structural and articulated measures already being studied by the executive, could be launched within a week, also in function of developments in the situation in the coming days. Support for exports is also one of the broader measures under study by the government. Sace, an institution controlled by the Cassa Depositi e Prestiti which ensures exports, should instead make available another 350 million euros to guarantee companies that sell abroad.
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Task force at Palazzo Chigi
In these very first days we are concentrating the interventions on the 11 municipalities of the red zone. Then there will be measures for the economy as a whole, Deputy Economy Minister Antonio Misiani told RaiRadioUno. Meanwhile, two economists arrive at Palazzo Chigi, Marianna Mazzucato and Gunter Pauli, to work precisely on measures to contrast the economic effects of the coronavirus. Prime Minister Giuseppe Conte has appointed them as his advisors to work on the various anti-coronavirus decrees. Mazzucato, Roman, but professionally raised in the United States, professor of Economics of innovation and public value at the University of London. Pauli a Belgian economist, expert in sustainable development.
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Banks ready for a moratorium
Pending government measures, the Banking Association has meanwhile advanced its willingness to extend the moratorium on the repayment of the debts of “healthy” companies that applies to loans stipulated by November 2018, to all contracts entered into during the course of 2019. The agreement allows small and medium-sized enterprises that have “non-impaired” debt positions with the bank to suspend payments for a year, and to extend the maturities of the loans.
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Loosen EU rules
At the same time, the Banking Association asked the government to intervene in Europe to loosen a little the new criteria for the definition of companies in crisis (the “default”) and the treatment of the credits granted to them. The payment moratorium, also against a healthy company, still involves a “prudential” treatment of suspended loans, therefore an expensive budgetary provision for banks.
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