For the first time since the launch of the recovery and resilience fund, the macro-financial instrument agreed by the European Union to deal with the economic consequences of the pandemic, Brussels has suspended the delivery of a section of aid one of its major beneficiaries, Italy, due to doubts about the degree of compliance with the milestones and reforms to which the aid is linked. Both sides have a month to discuss the pending measures. In case of disagreement, Rome could end up losing part of the money it has been allocated.
On December 30, 2022, the Italian Government sent its request to Brussels to receive the third tranche of funds. According to the regulation, the European Commission has two months to evaluate the requests, so a response was expected at the end of February. The desired approval, however, has not arrived. The office of the Prime Minister, Giorgia Meloni, assured in a statement before last night that, despite the fact that there has been “progress” in the dialogue on the fulfillment of the majority of the objectives, “it has been agreed to extend by one month the deadline to complete the technical evaluation and the verification of the activities”.
“The European Commission appreciates the significant progress that has been made in recent weeks and wants to maintain close cooperation with the Italian authorities to deal with all the pending elements of this complex request for disbursement”, community sources added yesterday, who remember that extensions have been agreed with other countries when necessary. According to the Italian press, Brussels has doubts about the reform of the system of commercial licenses for services in ports, as well as several urban renewal projects that were among the 55 milestones and reforms to which this section is conditioned and that they should have been ready by December.
The extension of the deadline to evaluate the measures, until the end of April, gives Rome more time to persuade Brussels that the measures adopted fit the requirements included in the recovery plan. Parallel to these talks, Meloni’s team is negotiating with Brussels to replace some of the projects included in the recovery plan agreed at the time with Mario Draghi’s government for others that are more viable in the short term, since it is not believes they can be completed before 2026, and secure Community funding for the original plans through other items. Rome also claims an extension to the fund’s execution deadline.
Italy is the country that has the most Next Generation EU funds allocated to its recovery and resilience plan, 119 billion in total. However, Spain is the most advanced country in its implementation. While the Italian Government has received approval from Brussels for measures valued at 28,900 million euros, the Spanish Executive has obtained the European endorsement for milestones and reforms that have allowed 37,000 million euros to enter, if s they include the 6,000 million that he approved in February, more than half of the money allocated.
Depending on the relevance of the uncompleted measures, Brussels can make partial aid payments, as it did in February with Lithuania after the country requested its first tranche of the funds, 565 million euros. The EC estimated that the Baltic country had fulfilled 31 of the 33 agreed measures and for now it will only hand over the money corresponding to these measures. The Lithuanian Government has until November to fulfill what it has agreed and collect.
