MNI: Italian Gov't Divided Over Push To Extend NGEU -Officials

The Italian government is divided over whether to formally request an extension to its EUR200 billion NextGenerationEU programme amid concerns that it will struggle to spend the money by the 2026 deadline, with European Affairs Minister Raffaele Fitto arguing that such a move could weaken the country’s position in other key European Union debates, Italian officials said.

While Finance Minister Giancarlo Giorgetti has already openly called for Brussels to grant an extension, and is preparing a push for the required unanimous approval from EU members after European parliamentary elections in June, Fitto fears this would detract from Italian influence in discussions over Capital Markets Union and future joint borrowing, the officials said. (MNI: Ireland, Luxembourg Resist Joint EU Supervision Proposal)

Prime Minister Giorgia Meloni has previously favoured a deadline extension to ensure that the economy receives the benefit of the NGEU programmes, which include major infrastructure projects, but has yet to come out in favour of either Fitto, a member of her Brothers of Italy party, or of Giorgetti, from junior coalition partners the League, sources close to her said.

European Council President Charles Michel has already indicated that such an extension could be granted, so long as Italy provides necessary assurances, though many EU members would be reluctant to extend a programme which was supposed to be a one-off response to the economic impact of Covid.

RECOVERY BUYS TIME

Giorgetti argues that the fact that Italy’s economy has recovered well from the pandemic means that there is more time to spend money under the programme with care, given the challenges of designing and then contracting out NGEU projects.

“It is better to spend it well, rather than going too fast and failing to use it to boost potential growth. That was the point of the plan,” said a sources close to the finance minister.

Fitto in contrast worries also that extending the deadline would reduce pressure on regional and local governments tasked with implementing much of NGEU, and that they would end up wasting resources. Rather than a general extension, the Europe minister would favour a deal such as that obtained by Spain, under which some state-owned companies will be allowed to spend NGEU funds beyond 2026 on projects already assigned.

“It would be better to have this debate at some point in the future, we are still far from 2026,” said one of the sources in Fitto’s camp, adding that the plan is set to make its strongest impact on the economy in 2024 and 2025, and that that has been incorporated into government economic projections.