Draghi Is Rushing Through Plans to Borrow Up to $48 Billion More

Italian Prime Minister Mario Draghi is bringing forward plans for as much as 40 billion euros ($48 billion) in new borrowing as the cost of keeping the economy afloat drains the state’s coffers and street protests heap pressure on the government, according to two people familiar with the matter.

The government will need between 35 billion and 40 billion euros to cover all of the country’s needs, from maintaining furloughs to sustaining help for businesses and families, the people said, asking not to be identified as discussions are confidential. A spokesperson for Draghi declined to comment.

Italian bonds fell after the report, with the yields on 10-Year debt climbing as much as five basis points to 0.71%, the highest level since March 30. The Spread over similar-dated German securities, a key gauge of risk for the nation, also rose.

Italy was one of the first countries hit by the coronavirus pandemic and its economy has been badly hurt with output falling almost 9% last year. The government has spent over 130 billion euros so far to support the economy which has pushed public debt to 155.6% of gross domestic product.

Earlier this week restaurant owners and other angry businessmen clashed with police in Rome at protests demanding a loosening of lockdowns and more economic help, while in southern Italy hundreds of demonstrators blocked a highway. The Italian economy has been in and out of lockdowns for over a year and the government closed restaurants and bars earlier this month. Restrictions may be eased slightly for much of the country later on Friday.

Draghi is also under pressure from within his governing coalition to be generous with new support measures. League leader Matteo Salvini has said the government should spend up to 100 billion euros if necessary and members of the government including Public Administration Minister Renato Brunetta have also pushed for higher spending.

The last package of economic support passed last month was worth 32 billion euros and Draghi said Thursday the new package will be greater than the previous one without giving details.

The government is also struggling to ramp up its vaccination program. Draghi had pledged Italy would be immunizing half a million people a day by mid-April but was forced to push that objective back to the end of the month following delays in the delivery of shots.

Draghi says he plans to reach 80% vaccine coverage by the end of September.