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Italy's Draghi presents new aid package, says won't be back as PM

·2-min read

By Giuseppe Fonte and Giselda Vagnoni

ROME (Reuters) -Italy approved an aid package worth some 14 billion euros ($14 billion) on Friday to shield firms and families from surging energy costs, in probably the last major act by outgoing Prime Minister Mario Draghi before a Sept. 25 election.

The latest measures come on top of some 52 billion euros already budgeted since January to soften the energy crisis in Italy.

They will be funded by higher value added tax revenues as a result of rising electricity and gas bills and by adjustments elsewhere in the state budget, without resorting to extra borrowing which had been requested by some parties.

Draghi told reporters the government was "helping families and firms without putting public finances at risk and causing tensions on the markets."

Italy is confirming its 2022 budget deficit target at 5.6% of national output set in April, Economy Minister Daniele Franco said at a news conference alongside Draghi.

Despite a worsening economic outlook due to the impact of Ukraine war, Draghi said he still saw no sign of recession in Italy.

He also said he was not available to serve another term as prime minister whatever the outcome of the election, at which he is not a candidate.

Some centrist parties have been pushing for the former European Central Bank chief to carry on as premier if the vote produces no clear winner.

Under the new aid package, Rome boosts and extends until November existing tax breaks that help firms pay lower electricity and gas bills.

A new scheme of state guarantees will help companies facing liquidity problems due sky-high energy costs.

A draft of the government decree seen by Reuters showed that state export agency SACE would offer free guarantees on loans with a rate no higher than that paid by government bonds with the same maturity.

The financing is intended to help with the payment of energy bills issued in the last quarter of 2022.

Among a raft of other measures, the scheme envisages a one-off 150-euro handout for 22 million workers and pensioners with an annual income below 20,000 euros. A cut in excise taxes on fuel at the pump will stay in place until November instead of Oct. 17.

To discourage firms from closing plants in Italy, the government decree revokes any state benefits already received if they move production abroad and fire 40% or more of their staff, Industry Minister Giancarlo Giorgetti said.

($1 = 1.0019 euros)

(Editing by Valentina Za and Gavin Jones)