Italy to use over 2 trillion reserve fund for tackling high prices

The government has decided to use over 2 trillion from the fiscal 2022 reserve fund for measures to tackle high prices, according to government sources.

Local governments can make flexible measures tailored to regional conditions because of the central pillar of the plan's aim is to add 1.2 trillion to the existing temporary subsidies for regional development.

The decision will be made at the earliest possible date on Wednesday by the headquarters for comprehensive measures on prices, wages and livelihoods, chaired by Prime Minister Fumio Kishida, according to the sources.

Some 700 billion of the 1.2 trillion earmarked for regional development is expected to be added to a framework set up in September to tackle high prices. Local governments can use money to formulate their own measures, but the central government will recommend specific projects such as liquefied petroleum gas LPG, reducing the burden of special high-voltage electricity for factories, and supporting dairy farmers hit by rising feed prices.

The subsidies for electricity and natural gas were introduced in January. However, this does not cover LPG mainly used in rural areas, leading to growing calls for LPG to be included in the ruling parties.

The subsidies can be applied to projects already recommended by the government, such as measures for public transportation and tourism related businesses, as well as subsidies for school lunches.

The government plans to provide 30,000 to each family of low-income households, such as those exempt from resident tax, the remaining 500 billion of the 1.2 trillion will be used to support low-income households. Local governments will likely be allowed to expand the eligible-household criteria, reducing the subsidy to below 30,000.

The government will provide low-income, child-rearing households with 50,000 for each child, and increase grants to municipalities to support hospitals that provide beds for COVID- 19 patients. The price of wheat that it imports and sells will be held back by the government because wheat is affected by high prices. There is a lot of 1 trillion dollars expected to be allocated for these measures.

The government's priority in the run up to the unified local elections in April is to tackle high prices and expand the scale of the measures.