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Italy lines up new $5.5 billion euro package to offset costly energy bills

FILE PHOTO: Japan's PM visits Rome

By Giuseppe Fonte

ROME (Reuters) -Italy is preparing a new package of measures worth around 5 billion euros ($5.5 billion) to help businesses and families cope with costly energy bills which it plans to announce next week, government officials said on Thursday.

The right-wing administration led by Prime Minister Giorgia Meloni earmarked over 21 billion euros in its 2023 budget to soften the impact of energy costs on the euro zone's third largest economy in the first quarter of this year.

Rome now wants to extend and review these measures, Economy Minister Giancarlo Giorgetti told parliament, with a decree expected to be approved by the cabinet on March 28.

Officials have separately said Rome has 4.9 billion euros of firepower to fund the scheme, using some of the initial funding that has not yet been spent.

Higher-than-expected gross domestic product (GDP) growth in 2023, which is now estimated by the Treasury at almost 1% from the 0.6% target set in November, will also boost tax revenues and helps fund the scheme.

"Growth targets set by the government in November could be reached or exceeded," Giorgetti said.

The minister said the government planned to extend until June an existing bonus aimed at cutting energy bills paid by low-income households.

The measure will benefit people with an annual income below 15,000 euros as calculated by the Isee indicator, which is used to estimate the economic situation of single workers and families.

Moreover, Rome intends to change a tax break to cut energy costs for firms, making it available only if the price of methane exceeds a certain threshold still to be defined.

A further measure to compensate heating costs will take effect from October, Giorgetti said.

Gas prices have fallen in recent months, with the Dutch TTF hub hovering around 41 euros per megawatt hour (MWh), sharply down from 73 euros in early 2023.

The economy ministry is due to update in April its growth forecasts and public finance targets in the Economic and Financial Document (DEF).

($1 = 0.9170 euros)

(Editing by Keith Weir)