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 consequences of the pandemic, Brussels has suspended the delivery of a tranche of aid to a country, Italy , due to doubts about the degree of compliance with the milestones and reforms to which the aid is linked. In case of disagreement, Rome could lose part of the money linked to the measures in question.
The European Commission was expected to rule at the end of February on the latest request from the Government of Giorgia Meloni. The desired green light, however, has not arrived. The Prime Minister’s office assured last night in a statement that there has been “progress” in the dialogue with Brussels on the fulfillment of most of the objectives but announced that “it has been agreed” with the European Commission “to extend the deadline by one month to complete the technical evaluation and verification of the activities”.
According to the Italian press, Brussels has doubts about the progress in the reform of the port licensing system as well as several urban renewal projects that were among the 55 milestones and reforms to which the last tranche of funds is conditioned and that they should have been fulfilled in December of last year. 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 with the requirements included in the recovery plan. Depending on the relevance of each reform, if they are not met, Brussels may proceed with partial payments of aid.
Italy is the country that has allocated the most Next Generation EU funds in its recovery and resilience plan, 119,000 million in total. However, Spain is the country that is most advanced in its implementation. While the Italian government has received the go-ahead from Brussels for measures valued at 28,900 million euros in aid, the Spanish executive has obtained European endorsement for milestones and reforms that have made it possible to enter 37,000 million euros to date, if the 6,000 million euros to which he gave the green light in February, more than half of the money he has allocated
To date, Spain has seen all requests for funds sent to Brussels accepted. The next one will include one of the most complicated milestones, the reform of the public pension system, the details of which the Government claims to have agreed with the European Commission to avoid problems with the next disbursement. This is the first time that the community executive, highly criticized by the European Parliament’s budgetary control committee for its management of the fund, has left a delivery of funds in the air due to doubts about the merits of the measures adopted to receive aid.
In February, Brussels detailed the methodology that it will apply in case a country does not complete all the agreed milestones. If a country fails to carry out a measure, the European Commission can proceed to make modulated partial payments based on their relevance within the recovery plan. The system implies, for example, the application of the maximum possible penalty in the absence of an agreement on the pension reform.
