MNI: Italy Set To Narrowly Meet Targets For EU19Bln EU Tranche

Italy is set to narrowly meet its June 30 deadline to pass targets set under the Europe’s NextGenerationEU programme, unlocking the next EUR19 billion tranche of funds, though some of the investment projects included as objectives are still to receive public money despite formal approval, two sources close to the matter told MNI.

Following approval this week of a framework law for new rules on government procurement, remaining targets appear easy to meet, the sources said. While there is a chance that some decrees and other measures authorising investment spending agreed with Brussels may still not have appeared in the official gazette by the deadline, officials feel they will have done enough to access the next installment of the total EUR190 billion promised to Italy under NextGenEu.

“We will see how the European Commission decides to measure compliance with the plan this time, but they didn’t have problems with the first tranche when the same sort of thing happened,” a government source monitoring the National Recovery Plan drawn up under NextGenEU told MNI.

The European money is key for Italy, which is facing a steep increase in market funding costs as central banks raise rates, just as it tries to restore its economy to health following Covid lockdowns and as it faces massive expenditure to reduce its energy dependence on Russia.

In some cases independent entities like the Court of Audit or the Data Protection Authority have yet to give the green light to measures, but the government will have complied with the “political part,” the source said.

Projects which have been authorised but still not legalised in the gazette include contracts for regional investments linked to the Health Ministry.

Even some of the projects included in the 2021 targets already given a pass by Brussels have still to be published. Another of last year's objectives -- the ReGis computer system designed to monitor the implementation of the Recovery plan and which was supposed to be functioning from the beginning of the year -- has also yet to start work.

HARDER TO SPEND IN SOUTH

Despite the increasingly fraught relations between the broad coalition of parties backing Prime Minister Mario Draghi’s technocratic government, Italy has made more progress with legislative reform than with setting up new investment projects, with the latter facing bureaucratic delays and difficulties finding bidders for public contracts, especially in the south of the country.

The government promised Brussels to spend 40% of its NextGenEU resources in the poorer south. While so far it has failed to reach that level, some of the planned projects are longer term and will only start receiving money over the coming years, a government source said.

Nonetheless, Italy is now looking like making the latest deadline, a goal which had been in doubt until Draghi knocked heads together inside the coalition some weeks ago, the source said. (See MNI: Italy Reform Progress Slows As Elections Near-Sources)

“We expect more fighting before the December deadlines, but this is how this government is,” said the source, adding that achieving the end-of-year targets will be made still more complicated by the inevitable increase in political infighting ahead of next year’s national elections.