Adds economy minister, details
MILAN, Oct 18 (Reuters) - Italy has approved a new stimulus package in its 2021 budget to foster an economic rebound from the recession caused by the coronavirus crisis, a government statement said on Sunday after a late-night cabinet meeting.
Expansionary measures in 2021 will total more than 39 billion euros ($45.70 billion), including some 15 billion euros of grants from the European Union's Recovery Fund, Economy Minister Roberto Gualtieri wrote on Facebook.
The ruling coalition, led by the anti-establishment 5-Star Movement and centre-left PD party, agreed a preliminary version of the budget, a government source said, leaving final details to be hammered out.
Among several measures, the government has set up a 4 billion euro fund to compensate companies worst hit by coronavirus lockdowns and extended until January a moratorium on repayments for loans to small and medium-sized businesses.
The budget also extends temporary lay-off schemes for companies with workers on furlough at a cost of 5 billion euros. Almost 6 billion euros are aimed at offering tax breaks to support employment in the poor south of the country, Gualtieri said.
Italian Prime Minister Giuseppe Conte is expected on Sunday to announce new measures to curb the steady spike in COVID-19 cases over recent weeks.
One of the European countries worst hit by the pandemic, Italy has forecast a 9% economic contraction for 2020 and a budget deficit equating to 10.8% of gross domestic product.
The budget is expected to keep Italy's deficit next year to 7% of economic output, up from a 5.7% forecast in April, reflecting the additional spending.
Italy has forecast economic growth of 6% in 2021.
($1 = 0.8534 euros)
(Reporting by Elvira Pollina Editing by David Goodman, Kirsten Donovan)
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