Italy’s Meloni sees no risk of losing EU recovery funds

Italy's Meloni sees no risk of losing EU recovery funds
© Reuters. FILE PHOTO: Italian Prime Minister Giorgia Meloni arrives at the European Union leaders summit in Brussels, Belgium March 23, 2023. REUTERS/Johanna Geron

By Giuseppe Fonte and Angelo Amante

ROME (Reuters) -Italy is determined not to lose any of the money it is entitled to from the European Union post-pandemic recovery funds, Prime Minister Giorgia Meloni said on Monday.

Italy is due to receive roughly 200 billion euros ($217 billion) in grants and cheap loans through 2026, making it the EU scheme’s largest beneficiary in absolute terms.

However, it is falling behind both on targets agreed with Brussels in return for the aid and also on spending money already received.

“I’m not worried about the delays on the Recovery Fund, we are working a lot on this,” Meloni told reporters on the sidelines of an event in the northern city of Verona, blaming problems on previous governments.

“I don’t take into consideration the possibility of losing the funds.”

Her remarks came after Riccardo Molinari, leader of the co-ruling League party in the lower house of parliament, told the Affari Italiani news site that Italy should consider no longer using some of the EU loans since it was having trouble spending them.

The European Commission has frozen a 19 billion euro ($20.65 billion) fund instalment for Italy, requesting clarification over Rome’s efforts to meet the conditions linked to the money.

Scope Ratings told Reuters on Monday that significant delays in Italian efforts to meet the targets in its recovery plan would likely lower the country’s medium-term growth prospects, with a negative impact for its credit rating.

Meloni said there was no reason to sound the alarm, although some of her ministers recently warned it would be impossible to finalise the whole investment programme on time.

EU Affairs Minister Raffaele Fitto said last week that some projects simply cannot be completed by 2026.

To gain some flexibility, Fitto previously said the government was in talks with Brussels to replace some schemes in its original recovery plan.

These would be replaced with less ambitious programmes that can be completed on time, while the original ones could be financed by separate European Union funds that can be spent until 2029.

The government is also seeking from European Union authorities around 6 billion euros under the so-called REPowerEU plan to completely wean itself off Russian gas and boost efforts to make its economy greener.

($1 = 0.9206 euros)

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