EU money stays in Italy

IItaly is pushing for an extension of the deadline for government spending under the European Recovery Fund. Because the state administration cannot allocate the funds quickly enough. Italy is the largest recipient of the grants and cheap loans from Brussels decided during the pandemic, which are intended to make up the investment backlog in infrastructure for transport and telecommunications, digitization, the eco-transition, education and health.

Across Europe, the funds amount to around 750 billion euros, of which Italy will receive 191.5 billion euros between 2021 and 2026. The money must be spent by 2026. Italy’s Europe Minister, Raffaele Fitto, who is responsible for the plan, has now announced: “I fear that spending this year will be far from the planned 22 billion euros”. And he reminded that the plans for 2022 have been reduced in two steps since the end of 2021 from 42 to 22 billion euros.

Authorities and business cite several reasons, including increasingly high inflation for energy, steel, cement and road asphalt. “There are tenders where not a single company has made a bid because the costs are 30 percent higher than the income,” reports the building contractor Angelica Donati from the construction and real estate company of the same name based in Rome, who also speaks for the building association Ance. Reopening the tenders with new prices takes time. This is another reason why the government is pushing for an extension of the deadlines.

Competent staff is missing

Italy’s authorities are also overwhelmed in many places. The public service has lost a lot of staff in recent years, the employees are older than average and below average competent. “Environmental impact assessments, for example, take a very long time,” reports Donati, “60 percent of the implementation time of a project is only used for planning”. The government report mentions other obstacles, including “events of a geological nature”, “archaeological finds”, “lack of environmental compatibility or landscape law decisions”, “difficulties in procuring materials”, but also “contradictory environmental regulations”.

The Chair of the Budget Control Committee in the EU Parliament, Monika Hohlmeier, is critical: “It is not uncommon for many reforms and projects to be announced, then initially only reforms that do not cause any costs are tackled, but due to the progress of the reforms, billions of euros are already being paid out for but which you don’t yet have any equivalent investment value,” she told the FAZ. The EU money from the reconstruction fund flows directly into the budget and therefore crowds out resources from the EU cohesion fund, which are more difficult to access. Hohlmeier worries that the money transferred – in the case of Italy 66.9 billion euros since August 2021 – could benefit other purposes. “According to the legal requirements, no current expenditure of the national budget may be financed.

But who can guarantee that the money will be available in three years when the investments start,” asks Hohlmeier, adding: “I don’t believe that the billions that have not been spent in Italy, for example, will just be parked like that.” A spokeswoman for the Ministry of Economics and Finance in Rome emphasizes that “unspent funds remain tied up in the missions”.

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