The Italian government has approved a bill to repay 40 billion euros owed to the private sector.
After a cabinet meeting on Saturday, Prime Minister Mario Monti said total debts were 80 billion euros at the end of 2011 and that banks estimated they had since risen to more than 100 billion euros.
"This means costs for businesses and for the whole country. It is an unacceptable situation that has taken on ever greater dimensions," he said.
Finance Minister Vittorio Grilli said the payments could begin on Monday and would extend over the next 12 months.
AAP reports Mr Monti said the payments would not breach the threshold of 3% mandated by the European Union.