Italy will sell state assets to kick start its economy
Italian Prime Minister Mario Monti's government yesterday approved a plan to sell state assets and measures to boost the country's anaemic economic growth as it seeks to cut Europe's second-biggest debt.
The government expects to free up €80bn in resources to help spur an economy mired in its fourth recession since 2001.
The steps to be taken include corporate tax breaks for hiring, higher incentives for property renovation and an overhaul of bankruptcy laws to allow companies to remain in business.
Italy also plans to start selling state-controlled assets as well as real estate and utilities controlled by municipalities.
The government expects to earn €10bn from the sale of stakes in Fintecna SpA, a holding that controls shipbuilder Fincantieri Cantieri Navali Italiani SpA, and two investment promoters Sace SpA and Simest SpA to state-controlled lender Cassa Depositi and Prestiti SpA.
Mr Monti is trying to convince investors that he can tame a debt of more than €1.9trn and bring down bond yields that jumped to more than 6pc this week as contagion from the region's debt crisis spread.
Italy's economic growth has lagged behind the euro-region average for more than a decade, complicating efforts to cut the debt. Cassa Depositi, 70pc owned by the Italian Treasury, can buy stakes in domestic companies and owns 26pc of oil producer Enid SpA.
Deputy Economy Minister Vittorio Grilli said the government has no plans to sell its 3.9pc stake in Eni, or stakes in Enel SpA or Finmeccanica SpA.
Cassa Depositi will aid in the disposal of public assets and has set up two funds to buy real estate and utilities owned by local governments. The funds will each begin with €1bn of capital. The funds will also seek outside investors to take stakes, Cassa Depositi said.
The growth plan will introduce corporate tax deductions of 35pc for companies that take on certain skilled workers and keep them on the payroll for three years.
Homeowners who renovate their properties will benefit from a 50pc deduction on their income tax, an increase from the current 36pc. The plan also increases the royalties the government charges for offshore extraction of natural gas and oil.
The plan includes measures to encourage lending for infrastructure spending, reducing the tax rate on the interest on so-called project bonds to 12.5pc, the same charged on government bonds.
Mr Monti's office and the finance ministry will both reduce senior staff by 20pc. (Reuters)