By Silvia Marchetti
ROME (MaceNews) – Rome’s government is honing a key pro-growth plan to deploy European pandemic aid which will be forwarded to Brussels by the end of April and will include ambitious investments alongside structural reforms, according to ruling coalition sources.
In order to apply for European funds the European Commission must greenlight the plan and failure to meet the deadline would make Rome lose the opportunity of accessing crucial resources needed for the recovery, warned an official.
“Italy is entitled to roughly a total EUR 190 billion of the EU’s recovery and resilience fund, otherwise known as the Next Generation EU plan, set up to support member states in tackling the COVID-19 economic impact. But in order to be able to use a part of those resources as early as this year we must forward a credible plan with a long-term perspective that also takes into account the post-COVID economic reconstruction”, said a source.
Sources noted that even though the framework of the plan has been recently greenlighted by Italy’s parliament some “further fixes” are being weighed at targeted ministerial meetings. Ruling parties have lately been at odds over the priorities of the fund, with the League pressing for more direct resources to be invested to support firms and workers while the Democrats pushing for greater investments in the long-run.
The plan, outlining how and in which sectors Italy will be spending Europe’s funds, spans interventions from 2021 up to 2026. Among the top priorities are investments in digital innovation and infrastructures and in the ecological transition to a more inter-connected, ‘green’ economy. But in order to make such measures efficient and boost productivity, sources argued they needed to be accompanied by ambitious reforms.
“The main challenge is to cut red tape, update and digitalize our public administration to speed-up procedures that hamper investments. We need to reduce bureaucracy and make our public administration more efficient, but we also need to reduce the length of our trials which are among the longest in Europe”, said an official. Some EUR 25 billion would go into digitalizing public administration.
Boosting tax credits for environmental-friendly investments are also paramount to kickstart the recovery, alongside equipping the entire country with ultra high-speed internet. “It is unacceptable that there still are parts of Italy, not too remote, that have no internet connection or a very poor one”, said a source.
In order to efficiently deploy EU aid, of which a first part is expected by summer, the government will be adopting a centralized approach. “A special task force under the direct supervision of the presidency and the economy ministry will be set-up to direct and invest incoming resources. Time is crucial and such method ensures a clear and immediate use of European funds”, said an official.
The European union will also be constantly monitoring how Rome spends the pandemic fund’s grants and loans and the work-in-progress of key investments, noted sources, making “accountability such a critical issue that only a centralized government unit can handle and promptly address requests coming from Brussels”.
In the next three-year period the EU aid could trigger an overall 3% rise in growth, said officials, provided the funds are timely and efficiently deployed and structural reforms implemented at the same time.
Officials stress that use of EU funds without the necessary structural reforms won’t get Italy very far on the way to recovery. EU aid alone, if not strengthened by reforms, would lead to barely 0.4%-0.5% rise in growth per year.
“The European Union has made it clear: in its recent country-specific recommendations Brussels warned Italy that without the implementation of key structural reforms, ranging from an overhaul of the public administration to welfare system and pension updates, pandemic relief aid would not be fully efficient if deployed within an unchanged framework”, warned an official.
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Contact this reporter: silvia@macenews.com.
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