Italian banks will offer up to EUR1.6 billion euros (USD$2.29 billion) of cheap credit to the tourism sector as the government tries to double its contribution to the economy, Prime Minister Silvio Berlusconi said.

"Our objective is for tourism to account for 20 percent of gross domestic product," Berlusconi told a news conference. "At the moment, we are at 10 percent, while in Spain it is 17 percent."

Companies can apply for construction loans of up to EUR2 million each, worth a maximum of 80 percent of the value of the building, with a maturity of between 6 months and 20 years, the prime minister said.

For the first year, tourism companies will be allowed to just pay interest on the loan, he said.

Among the banks taking part in the scheme are Unicredit, Intesa Sanpaolo, Banco Popolare, Banco Popolare di Milano and Banco Popolare di Sondrio.

Three tourism federations are also participating: Confturismo-Confcommercio, Federturismo-Confindustria, and Assoturismo-Confescercenti.

Tourism Minister Vittoria Brambilla said the loans were available immediately.