Italy government wins Senate backing to increase 2020 deficit

ROME (Reuters) - Italy's upper house of parliament on Wednesday authorized the government to increase the 2020 budget deficit, paving the way for approval in early August of the latest stimulus package aimed at helping the economy cope with the coronavirus crisis.

The new measures, worth a total 25 billion euros (22.6 billion pounds), will drive the Italian fiscal gap to 11.9% of national output, versus a goal of 10.4% set in April and a figure of 1.6% reported in 2019, the lowest in 12 years.

Rome sees its public debt, the second highest in the euro zone after that of Greece, rising to 157.6% of GDP this year.

The Senate passed the deficit request by 170 votes to 4 in the 319-seat chamber, with right-wing opposition parties abstaining. The lower house, where the coalition has a much larger majority, will vote on the measure later on Wednesday.

Italy has said the extra spending would go to increase financing for education and local authorities, to assist workers temporarily laid off during the crisis and to help the tourism and auto sectors.

Addressing lawmakers before the vote, Economy Minister Roberto Gualtieri also promised to extend a home loan repayments moratorium currently due to expire in September.

The new measures come on top of some 75 billion euros already deployed to help businesses and families. Overall, Rome plans to pledge up to 212 billion euros including state guarantees on banking loans, although only part of this sum is expected to be spent.

The size of the planned extra deficit could be reviewed later this year, as Italy hopes to front-load up to 10% of the money it could receive from Europe's recovery fund starting in 2021.

Prime Minister Giuseppe Conte announced this week Italy would send Europe its national recovery plan by mid-October.

(Reporting by Giuseppe Fonte; Editing by Alexandra Hudson)