MNI: EU To Allow Italy Some NGEU Spending After 2026-Officials

The European Commission is set to allow Italy to spend a portion of its EUR191.5 billion in funds under the NextGenerationEU programme beyond the 2026 time limit an Italian source close to the governing coalition told MNI, adding that the exception would only be made for some projects managed by publicly-owned companies.

Around EUR37 billion of Italy’s NextGenEU allocations are being managed by public companies including railway company Rete Ferroviaria Italiana, telecommunications company Infratel and energy group Enel, with hundreds of projects in danger of dragging on beyond 2026.

While until now officials have indicated that 2026 is a hard deadline for use of the funds, a Commission spokesperson told MNI that existing Recovery and Resilience Facility rules allow for a “re-flow” or re-use of leftover RRF resources after 2026 under certain conditions. The EC will even help states identify projects where this flexibility can be applied, the spokesperson said.

Many EU member states have struggled to quickly spend money made available under the huge programme enacted in response to the Covid pandemic, given the given the tight timetable and challenges arising from surging prices of raw materials which left initial budgeting estimations outdated.

Portugal unsuccessfully made a request several months ago for an extension of the 2026 limit, while Italy and Spain, the second-biggest NextGenEU beneficiary with EUR163 billion allotted, made a common push for the same objective.

"LOOPHOLE"

Given that Italy is currently locked in complicated negotiations with Brussels to overhaul the National Recovery Plan used as a basis for NextGenEU, it is still not possible to identify which projects would benefit from an extension, the Italian official said. (See MNI: Italy Seeks To Avoid More NextGenEU Payment Delays)

Only big projects would be allowed to benefit from what the source called a “loophole in RRF regulation” allowing for disbursements in 2026 of funds to be spent later. Italy will still have to enact economic reforms promised under its plan, together with meeting other conditions, the official said.

Companies benefitting from this exception will also have to provide evidence, via tender information and programmed starting dates for works, that the money is set to be spent as originally envisaged after unavoidable delays. The government should also have ceded control of the projects to the companies, in order to ensure they are free of political interference.

The European Commission has so far disbursed EUR85.4 billion to Italy under NextGenEU, but after excluding pre-financing, which can still be clawed back if milestones and targets are not met, the total is only EUR60.5 billion, less than a third of the total amount due to the country. Its revised Recovery Plan submitted to Brussels in August amends 144 measures worth EUR16.5 billion.