Italy Braces for Larger Than Expected Debt Load in 2021

Italy's national flag colors on the facade of Chigi palace after a news conference with Matteo Renzi, leader of the Italy Alive party, in Rome, Italy, on Wednesday, Jan. 13. 2021. Renzi's party is tiny, but without his lawmakers Conte doesnt have a parliamentary majority. Photographer: Alessia Pierdomenico/Bloomberg

(Bloomberg) -- Italy’s government expects debt to rise more than expected this year, as it increases fiscal stimulus to boost the economy.

The Treasury led by Finance Minister Roberto Gualtieri expects debt to rise to 158.5% of output in 2021, up from 155.6%, while the country’s budget deficit would be 8.8%.

Italian newspaper Corriere della Sera reported the new numbers first.

The eurozone’s third-biggest economy is reeling from a resurgent coronavirus outbreak and a deepening political crisis which has caused its bond spreads to widen

The government led by Prime Minister Giuseppe Conte agreed to a request for a 32 billion-euro ($39 billion) increase in debt on Thursday evening. It’s the fifth time the government has sought to expand its borrowing limits since Italy went into its first national lockdown last March.

The additional spending is on top of the current deficit projection for this year.