ROME (Reuters) - Italy intends to scale back its current set of state guarantees and create a new scheme to boost private investment in strategic infrastructure, Economy Minister Giancarlo Giorgetti said on Tuesday.
The move is part of Rome's efforts to phase out the expansionary policies adopted since 2020 in the wake of the COVID-19 pandemic and the energy crisis exacerbated by Moscow's invasion of Ukraine.
As of Dec. 31, 2022, state guarantees amounted to 15.8% of Italy's gross domestic product (GDP), Treasury data showed in April, marginally below the 16.1% of 2021.
"We are working on a systemic initiative that will mark a decisive step change in the way we finance investment spending on infrastructures," Giorgetti said speaking at an insurance conference.
He added the state guarantees should no longer be used to inject massive liquidity into the economic system, as Italy did during the pandemic, but instead to finance "selective interventions."
Following the crisis of Italian life insurer Eurovita, the government also plans to set up a guarantee fund to protect policyholders, funded with contributions from the insurance groups.
Such a fund would "ensure the protection of policyholders, especially in the life insurance sector, so as to support their confidence in the market and contribute to the stability of the financial system," Giorgetti said.
Italian insurance authorities placed Eurovita under special administration this year, the first time they have taken such a step, after rising rates blew a hole in the life insurer's cash reserves.