Italy may boost stimulus to US$18 billion as coronavirus infections top 10,000

ROME (BLOOMBERG) - Prime Minister Giuseppe Conte is looking to increase Italy's fiscal stimulus package for the fourth time in a month, officials said, as he pleads with his European Union partners for help fighting the coronavirus.

While finance ministry officials in Rome were working out how to double their existing package to as much as 16 billion euros (US$18 billion, S$25 billion) to support the economy, Conte joined a video conference with the other EU leaders Tuesday and appealed to them to show the same determination and solidarity they displayed during the euro crisis.

With the number of confirmed cases in Italy passing 10,000, Conte called on the European Central Bank to act to help shore up the economy, according to one European official, who spoke on condition of anonymity.

The premier evoked the "whatever it takes" language that came to symbolise the institution's key role in stabilising the euro area in 2012, the official said.

ECB President Christine Lagarde promised leaders that the central bank would make an announcement following its Thursday meeting, but urged governments to do their bit by delivering fiscal stimulus as well, according to another official with knowledge of the call.

Italy's in a desperate situation as the outbreak has brought the country's health system to its knees. It remains unclear whether a nation-wide lockdown is enough to stop the contagion and the economy is on the brink of a recession.

While the ECB has limited policy space to act, expectations are mounting among economists that it will cut interest rates deeper into negative territory and take steps to help struggling small firms. Some also predict bond purchases will be boosted.

Lagarde "will be aware that her first big policy decision will shape perceptions of her approach, and therefore it now makes sense to err on the side of a bigger response, given the deteriorating backdrop," Greg Fuzesi, an economist at JPMorgan Chase & Co. in London, said in a report to clients on Monday.

Conte said the euro area needs to use all the monetary and fiscal policy tools at its disposal to steady an economy battered by measures to stop the spread of the disease.

The Italian leader called specifically for coordinated fiscal stimulus across the EU. Germany, the bloc's biggest economy, has repeatedly shown a reluctance to deploy its budget surplus to backstop economic growth.

French President Emmanuel Macron was also expected to call for coordinated fiscal spending on the call, according to a French official who briefed reporters ahead of the call.