MNI: Italy's Delayed NGEU Funds Approved In Weeks-Officials

The European Commission is likely to approve the EUR19 billion disbursement of Italy’s third tranche of NextGenerationEU funds within weeks, despite an initial delay as the country’s progress under the programme is scrutinised, Commission and Italian government officials told MNI.

But while European officials stressed that Rome is likely to get its money, they acknowledged the great efforts necessary for Italy to achieve the 55 targets required in exchange for disbursement, including investment projects and legislative reform, and added that they expected further countries including Spain and Portugal to face challenges as the programme continues.

Spain, the second-largest beneficiary of NGEU after Italy, put off its request for loans under the EUR800 billion Covid recovery programme until recently, partly given the difficulty of organising investment projects quickly enough to spend the money before the plan expires in 2026. Sources also said that Portugal appears to have made an informal

request for NGEU’s life to be extended in order to provide more time for it to invest funds under the programme.

NO EXTENSION

Unfortunately for Lisbon, any extension of the programme is likely to prove impossible given the legal and political hurdles, and stern opposition from paymaster countries, such as Germany as well as the so-called “frugal’ states” -- Sweden, Austria, Denmark, Netherlands and Finland, European officials said.

Italy’s European Affairs Minister Raffaele Fitto and European Economy Commissioner Paolo Gentiloni are in close contact during Rome’s latest request, officials said, with one source pointing out that the delay is part of the broader renegotiation of Italy’s NGEU National Recovery Plan, which was drafted in 2021, in order to take account of both inflation and of the increase in its grant allocation.

The vetting of any request from Italy has to be seen to be particularly rigorous and thorough, given its near EUR200 billion share of the overall programme, whose perceived success or failure officials said may ultimately hinge on its ability to end decades of Italian economic stagnation. Commission staff also have more than half an eye on the European Court of Auditors as the latter monitors the vetting process.

The delay in the payment to Italy also comes as Brussels is irritated by the country's continuing failure to approve a reform of the European Stability Mechanism, making it only the only holdout in the EU and impeding its implementation. (MNI: EU Fears Italy ESM Delays Threaten Bank Resolution Review)

While the third tranche should eventually be finalised without much controversy, officials cautioned that the fourth is likely to be an even more complex proposition as Italy adapts its plan to prioritise projects under the REPowerEU programme, Europe’s response to the energy crisis provoked by Russia’s invasion of Ukraine.