MNI: Italy Risks Losing NGEU Money After 2026 -Officials
Officials tell MNI about Italy's struggles to spend its EUR200 billion in NextGenerationEU funds.
Italy has only managed to contract out EUR11.8 billion of the remaining part of its near EUR200 billion NextGenerationEU allotment to public and private companies, a much lower proportion than Spain or Greece and raising the risk that it will lose tens of billions of euros once the programme expires in 2026, European officials told MNI.
While money provided under NextGenEU must be spent on projects outlined in National Recovery Plans by the 2026 deadline, Recovery and Resilience Facility rules allow for extensions in the case that funds have already been allotted and whose use is not subject to political influence. But while Spain and Greece have been quick to take advantage of this facility, Italy’s Prime Minister Giorgia Meloni has instead concentrated, so far without success, on trying to secure an extension of the overall deadline – which requires unanimous approval by EU member states.
With only EUR45.6 billion of the total EUR102 billion so far disbursed to Italy spent so far, and projects delayed by bureaucracy and rising material costs, the possibility of an extension will be a key consideration for Meloni as she decides whether to support European Commission President Ursula von der Leyen’s bid for a second term after this week’s European parliamentary elections, officials expect. But at the same time, Meloni will want to consider the implications of this strategy the prospects for future joint EU funding schemes, with countries such as Germany likely to consider a NextGenEU extension as a sign of fiscal profligacy. (See MNI: NGEU Extension Debate To Be Linked With EU Budget Dossiers)
SPAIN AND GREECE
The Italian government will also accelerate efforts to make sure as much can be spent before the deadline as possible, with its official economic projections anticipating an increase in NextGenEU spending to EUR43 billion in 2024 and EUR56 billion in 2025. Italy received its first payment under the programme in 2021, so this will require a considerable increase in tempo, though Italian officials point out that legal and other reforms which were a prerequisite for receiving NextGenEU money are now largely complete.
Taking a different approach to Italy, Spain and Greece have managed to effectively secure extensions for almost 50% of their money under the scheme by assigning contracts for projects to public or private companies, with Spain allowed to extend spending on EUR76 billion and Greece EUR17.7 billion.
One modality employed by the Spanish and Greek governments has been to lend out NextGenEU funds to private contractors which then carry out the stipulated projects, in deals which often also bring in private funding. A total of 15 countries through 76 measures in their recovery plans have used these interpretations of the rules through financial instruments for over EUR100 billion in NextGenEU spending beyond 2026, the Commission told MNI.
LONG-TERM IMPACT
The Italians, given their much larger allocation under NextGenEU, were less active in this respect, an EU source expert in the programme’s operational aspects told MNI. Another source noted the risk that the European Court of Auditors might raise concerns given that states have handed over control of EU money to the private sector.
An Italian government official said Rome decided not to channel funds to the private sector using financial instruments, calculating that this would detract from the long-term economic value of the spending and do little to raise potential growth.
Despite having already secured much of its spending, Spain is still likely to support Italy’s push for an overall NextGenEU extension, Spanish and Italian sources told MNI, though the priority will be lower for Madrid than for Rome. Spanish Prime Minister Pedro Sanchez has recently publicly called for an extension. (See MNI: Italy's Meloni Eyes League Downgrade After June- Sources)