A wasted opportunity? Italy's EU funds bonanza hits the rocks

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Italy's hopes of transforming its economy with billions of euros of European Union pandemic recovery funds are unravelling fast, businesses on the ground say, with inefficiencies at all levels raising the risk of a greater boost to debt than to growth.

In mid-2020 Rome secured the lion's share of a 724-billion-euro kitty aimed at helping EU members emerge from COVID greener and more tech-friendly.

Italy is also behind schedule in spending money already transferred, worrying economists and rating agencies eyeing the sustainability of the world's third-largest debt pile. The PNRR contributed only 0.1 percentage points to Italy's buoyant 3.7% growth rate in 2022, according to the Treasury, far less than the targeted 0.7 points.

"We have to grow by 2% per year," said Carlo Messina, the chief of Intesa Sanpaolo, Italy's largest bank and its second biggest creditor after the European Central Bank.Vittorio Soldavini, the head of H.T. High Technology, a northern Italian software company, said the PNRR's problems had put businesses' investment plans on ice.

"We lack lawyers, accountants, engineers, everything," said Davide Carlucci, who leads Recovery South, a network of 323 mayors in Italy's under-developed south, where 40% of the PNRR cash is supposed to be spent.Gustavo Piga, an economics professor who teaches procurement policy at Rome's Tor Vergata University, said salvaging the PNRR would require "large-scale hiring of public tender experts on well-paid, permanent contracts".

The government is still awaiting a 19-billion-euro tranche of the EU funds blocked in March over missed policy targets stemming from 2022.

 

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