Italy to issue additional 10 billion euros of debt in 2013 - source

MILAN (Reuters) - Italy will issue an additional 10 billion euros (8.5 billion pounds) of debt this year to fund payments of overdue state bills to private businesses, an economy ministry source told Reuters on Friday.

That will raise Italy's total debt issuance target for this year to around 460 billion euros from 450 billion euros currently.

"The payment of the 10 billion euros in debt arrears will be funded through the issuance of new debt," the source said.

In April, Italy had already hiked its 2013 funding target to just over 450 billion euros following a pledge by the state to pay back 20 billion euros in arrears to cash-strapped private companies this year.

A cabinet meeting this week increased the size of arrears to be paid back in 2013 by a further 10 billion euros.

(Reporting by Luca Trogni, writing by Silvia Aloisi)