MNI: Draghi To Drive Through Projects For NextGenEU Cash

Italian Prime Minister Mario Draghi plans to simplify rules for awarding infrastructure projects and allow the government to directly appoint key officials as it accelerates preparations for spending tens of billions of euros of European Covid aid after delays which risked a public warning from Brussels, a source close to the matter told MNI.

With reforms of the courts and the civil service promised as a condition of the EU funds now drawn up and awaiting parliamentary approval, Draghi will turn his attention to speeding up the selection of NextGenerationEu projects over the next two months, the source said.

Separately, officials linked to governing coalition parties told MNI that Draghi is also preparing a push to pass a stripped-down reform of Italy's tax system, also promised to Brussels but not a precondition of aid money, after accepting that initial plans for an ambitious overhaul are unfeasible.

RENEWED PUSH

Without a significant shift in tempo, sources have warned Italy would fail to have sufficient projects ready in time to be able to spend EUR222 billion in aid under the National Recovery Plan approved by the EU.

So far, Italy has met 29 out of 51 targets for organising projects under the Recovery Plan, according to an official at Draghi's office. This is still short of the 90% completion rate the government has decided is a realistic objective as it strives to avoid a formal rebuke from Brussels next March.

Upcoming secondary legislation and decree laws will simplify rules for awarding projects, as well as give Draghi more power to name people to take charge of work, government sources said. The prime minister also plans to instruct government chefs de cabinet to provide weekly instead of monthly reports on NextGenEU progress.

Despite the challenges, Italy is still doing a better job of spending European funds than in the past, a Finance Ministry source told MNI, giving as an example the decision to use the government's own funds on work set to be funded by EUR25 billion in EU money before Brussels made its disbursement, the source said.

"This some saved us some time while we waited for [the European money] to arrive," said the source, adding that it was too soon to say whether the government would take a similar approach in 2022.

TAX REFORM

In a separate effort to restore impetus to government initiatives, Draghi is also preparing a renewed drive to negotiate reforms of the tax system with parties of his coalition. This was initially envisaged as a major project, but negotiations quickly got bogged down in disagreements between parties arguing for measures ranging from a flat tax to changes to inheritance tax, amid the perception that the government was close to letting the initiative die.

While details are not available, Draghi has now accepted that only modest changes will be possible, sources close to parliamentary talks on the matter told MNI.

As a result, the eventual tax overhaul will not be comparable in scope to sweeping reforms of the past, sources at the right-wing League and the centre-left Democrats said, though they added that they perceived renewed government determination to push something through.

Parliamentary timetables effectively mean that the government now has 18 months to pass the tax reform. It has already introduced measures to reduce taxes on labour in its 2022 budget, in which it will reduce overall taxation by EUR12 billion.