Italy revises recovery plan to unlock 18.5 billion euros in post-COVID funds

ROME (Reuters) – Italy said on Thursday it had agreed with the European Union on how to unlock some 18.5 billion euros ($20.7 billion) in long-delayed EU post-COVID funds and end a tug-of-war with Brussels over the cash.

A government statement said the move, which still has to be formally approved by Brussels, would allow Italy to secure almost all of a 19-billion euro third instalment in EU money that the European Commission froze in March.

Release of the cash is tied to 55 policy “targets and milestones” in Italy’s pandemic Recovery Plan which were supposed to be hit in the second half of last year, including providing 7,500 extra beds for university students.

Rome initially reported that the student housing scheme was on schedule, but Brussels rejected that assertion.

Prime Minister Giorgia Meloni said that after discussions with the Commission, the university project would be pushed back to the set of goals tied to a fourth tranche of funds worth 16 billion euros due later this year.

As a result, the amount of the third instalment decreases by some 500 million euros, while that of the fourth instalment increases by the same amount.

“The total of 35 billion euros expected in 2023 will be collected in full,” Meloni’s statement said.

Italy is due to receive 191.5 billion euros in grants and cheap loans through 2026 from the EU Recovery and Resilience Facility (RRF) in what is seen as a once-in-a-generation opportunity to revitalise a sluggish economy.

However, businesses are starting to worry that hopes of transforming the country with the cash are already unravelling in the face of bureaucratic incompetence and a lack of expertise at managing such projects.

($1 = 0.8945 euros)

(Reporting by Giuseppe Fonte; Editing by Crispian Balmer)