MNI SOURCES: Italy Struggles To Organise Projects For EU Cash

The Italian government is falling behind schedule as it races to pass key reforms on time in order to qualify for hundreds of billions of euros in NextGenerationEU funds, and risks a public warning from Brussels as it struggles to organise suitable projects on which to spend the money, sources familiar with the matter told MNI.

"I am very worried because I am not seeing anything of this in the press," said a senior official from the centre-left Democratic Party, which forms part of Prime Minister Mario Draghi's coalition. The government looks unlikely to meet deadlines necessary to qualify for the EU cash, the official told MNI, adding that Draghi had been too ambitious by packing reforms of the civil service and courts with measures which went beyond what Brussels was asking for.

Italy could face a public dressing down from the European Union early in the new year unless it makes quick progress, the official said, adding that Draghi, who is already said to be considering resigning next year to become the next national president, might find himself still more tempted to make the move if the reform process turns sour. Other sources identified March, when evaluations are due on Italy's progress under the National Recovery Plan approved by the European Commission, as a crunch time for the government. The economic spokesman of the right-wing League party told MNI earlier in October that reform deadlines might be missed. (See MNI INTERVIEW:Italy Risks Missing Reform Deadlines For EU Cash)

The government has also failed to design, approve and contract out many projects in southern Italy on which it has pledged to spend the EU money, an advisor to a regional government said. Big rail projects in the south risk not being ready to receive the funds, said the source, who has national government experience in public works.

CONTROL ROOM NOT WORKING

Sources from different coalition parties involved in implementing the Recovery Plan spoke of similar problems in other parts of the country.

"The control room is not working as it should," said a member of the populist Five-Star Movement, "The pipeline through which the money circulates needs to be improved."

Spending the money on time will require a lot of well-coordinated preparation, the source said, adding that care would also have to be taken to ensure funds are not improperly diverted.

The so-called Green Transition, earmarked to receive EUR68.9 billion of the EUR222 billion in Recovery Plan funds, is particularly struggling, with officials overwhelmed by bids from companies which have delayed already-planned green projects, in areas such as solar power generation, in the hope of obtaining EU funding.

A government spokesperson admitted concerns over progress on organising projects, but insisted they could be addressed on time. So far the government has organised some 41% of the projects it needs, but it could make 90% by the EU deadline, the spokesperson told MNI.

Italy has created a national fund to channel the EU money quickly, the spokesperson added.

A source in a committee which advises the government on economic policy defended its performance, pointing to the complexity of passing sweeping legislative reforms whilst also organising large-scale infrastructure projects at speed. But expectations for the government to deliver may be unrealistically high, the source conceded.

"The extremely good press that we are receiving, especially in the international media, could be harmful in the long term," the source added.

Business lobby Confindustria is happy with how Draghi is handling the reforms and the Recovery Plan, a source at the organisation told MNI, adding nonetheless that more impetus may be required.