Italian Economy Minister Vittorio Grilli will meet with the European Union's economics affairs chief Olli Rehn in Brussels on Monday to explain a new government decree to pay state debts to private firms, a government source said on Saturday.

Italy's caretaker cabinet on Saturday said it had approved a decree to pay some 40 billion euros of the state's debts to private companies over the next 12 months, seeking to provide businesses with vital liquidity and help tackle a deep recession.

(Reporting By Giuseppe Fonte, editing by Catherine Hornby)