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The Italian government adopts a €223bn recovery plan controversial by part of its majority




The Italian government has decided to devote 70% of its recovery plan to investment (photo: Italian Council Presidency).
The Italian government has decided to devote 70% of its recovery plan to investment (photo: Italian Council Presidency).
ITALY. Giuseppe Conte has decided to play double or nothing by adopting, on Wednesday 13 January 2021, a National Recovery and Resilience Plan (Piano nazionale ripresa resilienza - PNRR) worth €210bn to which €13bn of React-EU loans have been added for a total of €222.9bn. The President of the Italian Council will draw on the funds (€750 billion) granted by the European Union to its Member States under its NextGenerationEU instrument, presented in July 2020 and adopted in November 2020, of which Rome is the main beneficiary.

The Italian plan, to be presented in Brussels at the end of April 2021, focuses on investment (70% of the total sum) and also includes tax incentives and bonuses (21%). 20 bn of the funds will be devoted to health, €46 bn to the digitisation of administration and industry, €70 bn to energy transition, €32 bn to infrastructure and €30 bn to education and research. 144.2 bn will finance new projects and €65.7 bn will be used to accelerate the implementation of existing projects.

"The Council of Ministers has validated the largest investment plan ever undertaken in Italy", said Roberto Gualtieri, Italian Finance Minister. Satisfaction could be short-lived, as this NRPR is now to be voted on by the Chamber of Deputies and the Senate.

The ruling coalition, made up of the Democratic Party (PD) of Italia Viva (IV) and the Five Stars Movement (M5S), could explode on this occasion. Matteo Renzi, leader of IV (centre-left) and former Prime Minister, has already said that the content of the plan does not suit him. Especially in terms of investment and structural reforms. "This government is squandering its children's money," he said, demanding that Italy make use of the European Stability Mechanism (ESM) which helps eurozone countries in difficulty. The plan does not provide for this. The two ministers of Italia Viva, Teresa Bellanova (agriculture) and Elena Bonetti (family) abstained from the vote in the Council. The Chamber of Deputies has eighteen members from this party. Their defection would cause the President of the Council to lose his majority, leading him to organise a new legislative election.

Italy should post a debt increased by this plan by 158% of its GDP in 2021.

 

Eric Apim


Wednesday, January 13th 2021



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