(Finance) – An analysis of the strengths and weaknesses of the new PNRR. This is the subject of the economist’s latest Ecopill Andrea Ferrettiwhich is particularly concerned with understanding what the consequences of failure to implement could be and what developments are expected.
1 – The implementation status
As is known, Italy is the largest recipient of European funds from the Next Generation EU, having obtained almost 195 billion, of which 70 billion as non-repayable funds, to be used by the end of 2026. Of these, at the end of 2023, we have already received 102 billion in four installments and we have already requested the fifth. In a very recent report, the Commission highlighted how Italy is first in Europe in achieving the expected objectives: 178 objectives achieved out of a total of 527. This imprimatur of the Commission should not be underestimated at all, because a possible European alarm about the grounding of our PNRR would certainly have had very negative consequences on the markets’ confidence in our country and, with a public debt of 2,860 billion, the markets’ confidence it is sacred and inviolable.
2 – Strengths: the remodulation of the PNRR
For the timely implementation of the PNRR, it was essential that the government obtained authorization from the Commission to remodulate the initial plan. This remodeling will make it possible to shift resources worth around 20 billion from objectives that are no longer achievable to temporally acceptable targets more aimed at relaunching the economy. As part of this remodeling, for example, our companies will be able to count on approximately 12 billion, of which at least half will be allocated to “Transition 5.0”: energy saving, digitalisation, new production processes and artificial intelligence.
3 – Weaknesses: actual spending
The government’s recent report to Parliament highlighted that, compared to the 102 billion obtained so far, the actual expenditure recorded amounted to approximately 45 billion at the end of 2023. Which wouldn’t be so bad either. However, by shining a spotlight on its public investment component, which should be the backbone of the PNRR, the recorded expenditure would drop to around 20 billion. And since public investments in the PNRR as a whole are worth around 168 billion, it means that the bulk of these will have to be put to
earth between now and the end of 2026 at a rate of around 50 billion per year. Quite a commitment.
That said, the data on the percentage of expenditure is certainly a point of attention, but not a red alert. In fact, it must be considered that the data is penalized by at least two factors: 1) some expenses, even if carried out, have not yet been accounted for; 2) the first three-year period of the plan was characterized by reforms, planning and authorization processes relating to tenders, while the next three-year period will be characterized by the grounding of the works, with a consequent strong increase in the percentage of expenditure made.
In conclusion
Therefore, at the moment there is no red alert on our PNRR but only the need for serious and continuous monitoring.