Italy is planning to allocate around €15 billion to ease soaring energy costs on households and businesses within the 2023 budget.

Prime Minister Giorgia Meloni's government is to hike next year’s budget deficit to 4.5% of GDP, from the forecast 3.4% back in September by the Mario Draghi administration. Two government sources told Reuters news agency this would allow budget room for growth measures worth around €21 billion.

The resources to bolster the economy will increase should there be a lower deficit next year than the 3.4% of GDP forecast in September, the sources added.

In addition, Italy is planning to generate further revenue by slashing part of the €9 billion allocated for a “citizens' wage” poverty relief scheme next year.

In 2022, Italy’s public finances have been more robust than forecast, with VAT revenues and excise duties lifted by soaring inflation and skyrocketing energy prices. Furthermore, inflation has also helped to slash the country’s massive public debt.

Last month, Italy’s EU-harmonised inflation rate reached 12.8%, the highest since the series was launched in 1996.

According to Reuters, this has given the PM “valuable fiscal leeway to expand the economy while still keeping the deficit-to-GDP ratio on a downward trajectory over coming years.”

However, Meloni has said she would allocate the majority of the available funds to combatting the energy crisis, and push back some of the coalition’s plans of higher pensions and tax cuts.
The revised estimates are due to be published on Friday within the Treasury's annual Economic and Financial Document (DEF). They will form the initial structure for next year’s budget law, which needs to be approved by the end of 2022.