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Italy is the biggest beneficiary of Next Generation EU, but although the Italian government has successfully taken the lead in obtaining the fifth instalment of Next Generation EU and applied for the sixth instalment, the issue of how to use this money has never been resolved.
Roberto Castaldi is Professor of Political Theory at eCampus University, Director of the International Centre for European and Global Governance and Director of the Euractiv Italian Centre.
Italy’s National Recovery and Resilience Plan (NRRP) accounts for nearly 200 billion euros of the EU’s 750 billion euro Next Generation EU (NGEU) plan, which aims to revive the post-pandemic economy through common European debt.
Italy’s ability to use these resources effectively and in a timely manner will determine the country’s future growth prospects and whether it can structure its debt and fiscal capacity at the European level to finance public goods, from ecological and digital transformation to national defense.
Italy has chosen to use all available NGEU funds, including subsidies and loans. So far, Italy has received 113.5 billion euros in the first five tranches from the EU, which are related to achieving various goals, mainly reforms rather than actual investments.
In X Italian Prime Minister Merloni proudly declared: “Italy ranks first in the European Union in terms of the number of targets achieved and the amounts received. We were the first country to request payment of the fifth and sixth installments of the program.”
However, Alessandro Alfieri, a councillor representing the Democratic Party of the National Reconstruction Party (NRRP), criticized the government and stressed that “there are problems with the implementation of the project”.
According to the Italian National Institute of Statistics, Italy has so far launched investment contracting procedures for more than 160 billion euros, but actual spending has only been around 52 billion euros. Government Reports Its implementation.
In reality, NGEU funds are meeting other cash needs, which must then be drawn down to finance actual planned investments.
Essentially, the inability to spend money quickly has a doubly negative impact.
On the one hand, it deprives the economy of a direct stimulus and boost to growth potential, since these are productive investments (or should be).
On the other hand, it hides the dismal state of the current public accounts, but risks a huge bill when all planned investments have to be withdrawn and put into practice.
Government members have occasionally sought to delay the 2026 deadline in order to use NGEU funds, although European Commission sticks to deadline.
But Italy needs to spend the money quickly and efficiently to extend the deadline, or risk losing it. The same could happen to other European funds, such as the Cohesion Policy Fund.
According to official data Open cohesionin the 2014-2020 cycle, the total amount was about 130 billion euros. But actual spending was only about 74 billion euros.
So far, only 15% of the projects have been completed, 11% have been cancelled, 70% are in progress, and 4% have not even started. Fortunately, Italy has not lost any money due to the delays caused by the epidemic.
But as Italy spends the old funds, it also risks losing the new ones, worth about 75 billion euros for 2021-2027. So far, less than 8 billion euros worth of projects have been launched and about 500 million euros have been paid out.
Italy has focused mainly on the national trade union confederation, which has the most public attention but still lags behind in terms of infrastructure investment. Italy has also neglected cohesion funds, which are at risk of being lost and are mainly managed by the regions.
The most important reform of Italy’s public administration is to enable it to invest, not just spend recurrently. If the NGEU can achieve this, it will make a huge difference.
(Editing by Rajnish Singh)
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