* Rift deepens between ruling parties and economy minister
* Govt provisionally approves decree aimed at reviving economy
* Contains tax breaks for investments, cuts red tape on tenders
* Government to take a stake in Alitalia
By Giuseppe Fonte and Gavin Jones
ROME, April 4 (Reuters) - The Italian government on Friday failed to approve a planned decree to reimburse thousands of savers who suffered losses in bank collapses as a rift deepened between Economy Minister Giovanni Tria and the ruling parties.
Tria, a 70-year-old academic who is not a member of either of the ruling parties - the right-wing League and the anti-establishment 5-Star Movement - has often struggled to get along with his political backers, especially 5-Star.
This week Tria, Prime Minister Giuseppe Conte and party chiefs were all forced to deny reports that the minister was ready to step down due to clashes over how to make good on a commitment to pay back those who lost their savings.
The government has set aside 1.5 billion euros ($1.68 billion) for the reimbursement of ordinary people who invested in banks’ shares and bonds, which was among 5-Star’s campaign promises ahead of last year’s election.
However, Tria fears it will fall foul of European Union rules governing bank rescues and drew up an alternative plan which he tried and failed to push through cabinet during a lengthy meeting on Thursday.
Tria’s proposal, to automatically reimburse less-affluent savers, and set up a special commission to judge the claims of better-off investors, was rejected by the ruling parties.
Instead, Conte will meet representatives of the savers on Monday, after which the cabinet would make a fresh attempt at approving legislation to allow the compensation to go ahead.
After the cabinet meeting 5-Star leader and Deputy Prime Minister Luigi Di Maio, whose relations with Tria have been particularly strained, said he was pleased with the outcome but the long-delayed promise to savers had to be kept quickly.
“We can’t waste any more time, their patience is finished and so is ours,” he told reporters. “We want those who lost their savings to be paid without arbitration or litigation, they have to be reimbursed.”
The reimbursement of the savers was supposed to be approved along with a package of emergency measure aimed at lifting the euro zone’s third-largest economy out of recession and ensuring modest growth this year.
This so-called “growth decree” was approved only provisionally, with a proviso that disputes over the details in the draft brought before cabinet still needed to be fixed.
The decree focuses mainly on companies, increasing tax breaks on investments in machinery, cutting property taxes on factories and warehouses and simplifying procedures for public tenders.
Among a range of other tweaks to the corporate tax regime, it also offers fiscal incentives for company mergers and for investments in research and development.
The decree comes just a few days before the government presents a new economic forecasting document (DEF) which will form the framework for its 2020 budget.
The coalition are betting that the measures approved can lift this year’s GDP growth to 0.3 of 0.4 percent, government sources told Reuters on Wednesday.
Without the decree, growth would be headed for just 0.1 percent, according to the Treasury’s calculations, down steeply from a 1.0 percent forecast made in December before data revealed a slump in GDP at the end of last year.
Di Maio said the decree included a provision for the government to take a stake in Alitalia, under a rescue plan for the ailing national carrier. ($1 = 0.8920 euro) (writing by Gavin Jones Editing by Susan Thomas)