Italy struggles to spend its EU funds

Italy is studying how it can better utilize its large share of the European Union's COVID-19 pandemic recovery funds, to avoid wasteful investment proposals and ensure the money is used on time.

The country has until June 2026 to find suitable projects that aim to improve infrastructure, reduce inequality and increase long-term economic growth for debt sustainability.

But the nation is having difficulty managing the 191 billion euros ($208 billion) it secured from the EU's 672-billion-euro program, created in 2020 to aid member states.

Convoluted bureaucracy and limited local management capability have hindered Italy's ability to manage the EU funds, reported the Financial Times newspaper.

"It is fundamental to correctly use this money," a senior Italian official told the FT. "This is an important opportunity for Europe and our country."

The official said Rome aims to submit an updated plan to the EU by the end of next month, having already cut 148.5 million euros of funding for stadium projects in Florence and Venice due to objections from Brussels.

The Euronews website reported that the main reason for delays is bureaucracy, with slow and complex procedures hampering management of such a large amount of resources in such a short time.

In March, the European Commission postponed the disbursement of a 19-billion-euro installment by one month, to assess if Italy had met the requirements to receive the funds.

It noted an official report from the Italian government that detailed progress on the spending of funds received so far from the EU, and that listed all the scheduled reforms and projects. The biannual report said that smaller municipalities have struggled to keep up with the demands.

Italy had only spent 23 billion euros, just over one-third of the 67 billion euros already received, according to the report. It said some districts had already decided to forgo part of the funds as they cannot manage the increased income with their limited technical skills available for such major projects.

Italy's investment plan consists of 25 billion euros for railway lines, 15 billion for health clinics and other medical infrastructure, 4.3 billion to repair water pipes and improve storage, and billions more for nurseries, schools, and urban renewal.

However, a lot of the money is earmarked for municipal projects, some of which lack quality, according to government officials, noted the FT.

Raff aele Fitto, the Cabinet minister tasked with managing the program, warned lawmakers last month that major changes were needed.

"It's necessary to immediately understand which of these projects can be improved and which won't be achieved," he said.

Last month, Prime Minister Giorgia Meloni said Italy is determined not to lose any of the money it is entitled to from the recovery funds, in response to comments from Riccardo Molinari, leader of the co-ruling League party, who suggested Italy should contemplate declining some of the EU funds due to the difficulties in executing investment projects.