Several reasons are putting the execution of the National Recovery and Resilience Plan at risk and the newest choices by the Meloni government might potentially make the situation worse. But there are also other money arriving that Italy has traditionally mismanaged: what will happen to the most ambitious financial endeavor since the Marshall Plan?

pnrr italy
The National Recovery and Resilience Plan (PNRR) of Italy /EUROPEANS24

There is misunderstanding regarding the PNRR in Italy. The funds are being spent slowly, and the Meloni government wants to get their hands on them by proposing a revision of the plan to the European Commission. Almost two years after its approval, the National Recovery and Resilience Plan, which was supposed to change the face of Italy, is bringing out some of its most well-known problems, particularly in the Public Administration: various factors are slowing project development, and the government's choices may even worsen the situation. In addition, there are also other incoming funds to manage. What is happening to the most ambitious financial intervention since the post WWII Marshall Plan?

Raffaele Fitto, Minister for European Affairs, Cohesion Policies, and the PNRR, stated unequivocally: "Some interventions cannot be carried out between now and June 2026: it is mathematical, it is scientific, we must say it clearly." Fitto acknowledged the difficulties in carrying out the Plan. In fact, Italy risks failing to meet the Pnrr project targets required to release European Commission funds: no objectives met, no money. 

These issues have been validated by the Court of Auditors. The accounting judges reviewed the PNRR's progress in approximately 900 pages of documentation. The first piece of news is that Italy has spent less PNRR resources than anticipated. Accounting magistrates assess roughly 23 billion euros wasted, 12 percent of the money available between now and 2026, based on data collected from the ReGis system - the database of the General State Accounting Office. However, these data must be cleansed via "automatic" processes before being combined into the PNRR, such as Transition 4.0 tax credits and building benefits such as the Superbonus.

Without these expenses, the statistics alter dramatically: as shown in the graph, the billions spent by Italy amount to just 10% of the total, over two years after the National Plan for Recovery and Resilience was approved. In detail, Mission 6's Health expenditure is decidedly low, 79 million out of 15,626, or 0.5 percent. Mission 5 of Inclusion and Cohesion reaches 239 million - 1.2 percent of the 19.8 billion budget - while Education and Research receives 1.2 billion out of 30.8 billion. The completion of Mission 3, "Infrastructure for Sustainable Mobility," at 16.4 percent, deviates from the trend, although this is merely an optical illusion: these are railway contracts from prior years.

So far, the European Union has only provided Italy with a portion of the funding, totaling around 67 billion euros, through pre-financing and first and second payments. The Draghi administration had intended to spend more than 40 billion euros by 2022, however this figure was ultimately decreased to 33 billion euros. In light of the slowness shown thus far, several measurements have been shifted ahead in time, maybe optimistically. As seen in the graph, new programming spreads throughout the coming years what has not been done previously.

According to the Court of Auditors, the spending level of the PNRR funds will be nearly 15 billion lower than expected at the end of 2023, with the spending peak expected in the two-year period 2024-2025, with annual values exceeding 45 billion to meet deadlines. However, the Court notes that "more than half of the measures affected by the flows are experiencing delays or are still in the early stages of the projects." The trees that will be planted with PNRR monies that are still in the planning stages are an excellent example.

For these reasons, the Meloni government is renegotiating some aspects of the Plan with the European Commission, with whom it is also discussing specific projects, such as the redevelopment of the Franchi Stadium in Florence and the Bosco dello Sport in Venice, which will not be funded by the PNRR. 

However, the Commission has requested that the revisions be submitted "as soon as possible." Furthermore, Italy has expressed interest in requesting new cash, although in the form of loans. The government has also restructured itself while working on a modification of the Plan.

The PNRR's new leadership and longstanding doubts

By establishing a new body in the Prime Minister's Office, the mission structure of the Pnrr, which will function under the supervision of Minister Fitto, the Meloni government has given itself a new organization and centralized authority over the PNRR. However, presidential ministries and departments will be permitted to adjust their structure for handling finances.

Appointments, office changes, and general reorganizations of this nature require time, which the administration on the Pnrr has not included into the delays amassed thus far. The Court of Auditors also raised worry about the new governance, emphasizing that the changes must be implemented "without interruption" to prevent "the risk of administrative action slowing precisely at the critical moment in the implementation of the new governance."

The government's proposal, which attempts to streamline Plan management by centralizing it on Palazzo Chigi, risks having the opposite effect and fueling PNRR delays that should have been reduced. Furthermore, these options may slow down the management of other funds.

The Italian bureaucracy not only administers the PNRR's 191.5 billion. Arriving from the European Union are the React Eu 13 billion and the National Fund supplementary to the PNRR over 30 billion, on which the Court of Auditors has underlined "critical issues and delays." 

To this must be added the European structural funds of the 2021-2027 programme, with an endowment of around 83 billion euros. When we add together the 28.7 billion euros from the present programming period that must be spent and approved by the end of 2023, we arrive at about 400 billion euros that must first be handled before they can be spent.

Historically, Italy has had difficulties handling European monies, but the government's adjustments include the abolition of the Agency for Territorial Cohesion, which had previously assisted the Regions in planning and spending these financial resources on the territory. Palazzo Chigi will handle it. All of this is occurring while, once again, we are not in good position in terms of spending progress: as shown in the graph, Italy is the last country in Europe in terms of structural funding utilization, behind only Spain.

At the end of last year, Italy has spent 60% of the cash budgeted from 2014 to 2020. Although there has been some progress in recent months, the European average of 76 percent expenditure remains a long way off. And now the Territorial Cohesion Agency will be gone as well.

The reasons for the PNRR delays

Italy has spent barely 6% of the PNRR's entire funding two years after its ratification. The causes for these delays are similar to those witnessed in previous years for the handling of other European Union funds. Furthermore, the Court of Auditors has highlighted concerns about additional possible slowdowns after the recent government decision to centralize Pnrr management and remove the Territorial Cohesion Agency, which has previously played a key role in supporting Regions with fund expenditure.

Furthermore, obtaining skilled technical professionals to run PNRR projects is increasingly challenging, particularly at the municipal level: contracts are temporary - with the prospect of renewal but no assurance - and salaries are low. Those who choose to work in the private sector or just refuse to leave their home. According to BolognaToday, Emilia-Romagna is complaining about a lack of labor to ground projects.

In Rome, however, according to RomaToday, municipal employees choose to go to the ministries for the best economic conditions. Others of a technological character have been added to these organizational criticalities: the General State Accounting Office's Regis IT platform is not functioning properly. This infrastructure is vital because it records and monitors the development of projects, allowing disbursements and loans to be recognized based on this data. The National Association of Italian Municipalities (Anci) appealed to the government to complain about Regis's dysfunction.

The platform's issues are significant since municipalities are the project implementers in the area: as stated by Dossier di MilanoToday, the municipality of Milan alone has a budget of around 878 million euros, and it is difficult to do so without the operational manuals - which the central administrations have not yet made accessible - and, more importantly, without all of the project codes that have not yet been properly registered by the responsible ministries. 

The PNRR's management machine is malfunctioning, threatening the most ambitious financial plan since World War II. Everything is in the hands of the administration, including the country's future.

Source: Cesare Treccarichi / TODAY.IT
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