MNI: Italy To Request EUR19Bln NGEU Tranche This Year-Sources

The Italian government will submit its request for payment of the next EUR19 billion tranche of funds allocated it to under NextGenerationEU before the end of the year, despite its earlier admissions of difficulty in meeting deadlines for reforms and investments agreed under the programme, government officials told MNI.

Making the request by Dec 31 will mean that Italy has requested the maximum two annual disbursements permitted under the programme, and will also be able to make another two next year, the officials noted, asking not to be named.

While Italy may fail to have organised all its promised investment projects using NextGenEU money, other commitments including an overhaul of the courts and competition rules should be completed on time, which Italy trusts should be enough to satisfy Brussels following a visit by European Commission officials earlier this month, the sources said.

Approval of new rules on public procurement last week was the main remaining obstacle for the competition reform, and the right-wing government of Prime Minister Giorgia Meloni has decided to proceed with a reform of the justice system without trying to make further modifications once a 60-day delay on its implementation expires on Dec 30.

The European Commission has previously made generous interpretations of NextGenEU targets when approving disbursements for Italy, on several occasions accepting publication in the country’s official gazette as sufficient proof that objectives have been met. (See MNI: Italy Seen Meeting EU Funds Targets; More Scrutiny Likely)

But at the same time, European officials have been firm in rejecting Italian suggestions that NextGenerationEU be extended beyond 2026, and have emphasised that any funds not used on time will be lost, the sources observed.

INFLATION ADJUSTMENT

Italy is hopeful though that Brussels will allow adjustments to its National Recovery Plan, containing infrastructure projects and legal reforms and which was the basis for its NextGenEU funding, as a result of the effects of inflation, they added. Meloni will make a formal request for an inflation adjustment, which could include a call for more funds as well as permission to alter plans to spend money already granted, in early 2023, they said.

"It is clear that this has been a common problem in other countries and we have been listened to," said one of the sources.

Soaring prices for raw materials and other supplies will lead to some projects being pushed back as well as affect other NextGenEU targets next year, a source monitoring Italy’s Recovery Plan efforts told MNI.

The government is preparing an ad hoc decree in 2023 which could, depending on how Brussels responds to Meloni’s request, allow for significant changes to the plan, including a possible overhaul of its administration, which is currently charged to an independent body staffed by civil servants appointed under former Prime Minister Mario Draghi with terms running until 2026, sources said. European Affairs Minister Raffaele Fitto, who has special responsibility for the Recovery Plan and has admitted the possibility of delays in its implementation, has also called for changes, has said he wants the plan to be more ambitious and focused in its design.