MNI: Italy Seen Meeting EU Funds Targets; More Scrutiny Likely

Italy is set to meet a Dec 31 deadline for all 55 targets required to unlock its next EUR19 billion NextGenerationEU tranche, sources close to the matter told MNI, though they noted that Brussels could be stricter in ensuring compliance with the programme under the country’s new right-wing government.

Some 31 objectives, including infrastructure contracts and legislative reforms included in the National Recovery Plan according to which Italy has pledged to spend NextGenEU funds, have either already been achieved during the government of former Prime Minister Mario Draghi or are close to completion, sources said. Others require little work, they added.

On Monday in her first press conference as prime minister, Giorgia Meloni announced that part of the justice system reform whose approval is a key Dec 31 target might take effect later than Nov 2 as initially envisioned, but she and Justice Minister Carlo Nordio insisted it would be implemented on time in line with Italy’s commitments.

Still, the move could raise eyebrows in Brussels, according to Luca Dal Poggetto, from Open PNRR, which monitors implementation of the National Recovery Plan.

“We need to see what this delay will really mean. If they plan to introduce changes in the original reform,” said Dal Pogetto.

GENEROUS INTERPRETATIONS

While Italy’s interpretation of whether it has achieved targets has often been loose, and Brussels has on several occasions turned a blind eye when winners of contracts previously declared complete have only been subsequently announced in the official gazette, it was likely that EU officials assumed Draghi’s government would honour its commitments, he said.

“There have been cases, as with tenders by the Culture Ministry, that have been reopened after they were registered as ready for the June 30 deadline,” Dal Poggetto noted, adding that the European Commission had nonetheless disbursed funds after the mid-year mark without raising concerns. (See MNI: Italy Set To Narrowly Meet Targets For EU19Bln EU Tranche)

Whether the EU will extend the same tolerance to Meloni remains to be seen, he said. Brussels could become more demanding with regards to the quality of targeted reforms and projects if she goes ahead with plans to renegotiate the terms of the NextGenEU money.

While remaining targets for this year should be achieved with little input from Meloni, requiring only parliamentary rubber-stamping or little additional work, it is already clear her government will take a less technocratic approach to Recovery Plan projects. Politicians in charge will need to time to learn the ropes, a source in the technical secretariat administering the plan told MNI.

Meloni’s coalition is likely to modify a reform of Italy’s competition rules, included in the December NextGenEU targets and now in the parliamentary committee stage, said Dal Poggetto. It could alter the design of an antitrust authority and change rules on concessions for beaches, he said.

But the government will find it more challenging to change the new procurement code, or measures required to reduce tax evasion by 15% compared to 2019. The evasion crackdown is meant to raise revenues by around EUR2.8 billion, a target which should be easily achievable in part thanks to inflation, sources said.