By Silvia Marchetti
ROME (MaceNews) – An expected right-wing coalition victory in upcoming elections could delay Italy’s deployment of key European pandemic aid funds aimed at supporting the recovery, with the result of lower growth, warned outgoing ruling coalition sources.
Democrat party sources argued that the electoral program of the far-right alliance aims at changing the Recovery and Resilience Fund set up last year by Rome’s government to invest some EUR200 billion in EU direct pandemic aid effectively.
“They (the rightists) want to buy time and re-negotiate with Brussels a new agreement, but truth is, time is running out. We have already received a first tranche of EUR21 billion from the European Commission and expect to get another EUR25 billion in coming weeks.However, in order to be granted these resources we must meet investment projects targets and set timeline,” said the official.
Italy is the EU’s largest beneficiary of EU pandemic aid, which consists of a mix of loans and grants, but if Rome fails to speedily deploy the money the country risks missing an opportunity for growth, warned another source.
With the upcoming general elections set for September 25 the right-wing coalition, ahead in all polls, and in particular the Brothers of Italy group, insist the recovery fund could be improved through a new round of talks with Brussels.
Sources from the Brothers of Italy party argue that the plan was designed ad hoc to tackle the economic impact of the COVID pandemic but prior to the outbreak of the Russian invasion of Ukraine in February, which has led to a further recession across Europe and soaring energy costs weighing on families and firms.
“It is written in the European treaties that framework agreements such as the recovery fund can be re-visited if new conditions arise, and we believe the fact that it was created without taking into account the extra repercussions of the energy crisis and the Russian-Ukrainian conflict is a good reason to modify certain aspects of it,” said a right-wing coalition source, adding that the war would likely continue with more “unpredictable costs.”
Rightist officials argue that the impact of the recovery funds on GDP, due to the Ukraine crisis, will inevitably be lower than expected in the long-run, with a drop from 3.6 percent to 3.2 percent in 2026, when the effects of the key strategic investments in green technology and infrastructures are expected to bear fruit.
“It is quite clear that the recovery and resilience plan defined before Russia’s invasion of Ukraine is outdated, unrealistic, we need a new plan that tackles in a more significant way the difficulties faced by low earners and struggling businesses,” said a Brothers of Italy party member.
Outgoing ruling coalition sources agree on the fact that a re-negotiation with Brussels would further delay the implementation of the recovery funds, given that at the end of last year only EUR 5 billion had been spent out of a planned EUR 15 billion.
“We’ve been catching up in the past few months, but our outgoing cabinet can only operate within a limited mandate given the upcoming elections, and a halt, or worse, a revision of the plan by the next government could be catastrophic,” said another Democrat official.
In October the future government will have to take stock of the economic impact of the Russia-Ukraine war on Italy’s economy and public finances, and will likely revise previously set fiscal targets including a possible GDP cut.