What will happen to Italy with the PNRR, National Recovery and Resilience Plan? Soon said: in the Plan presented by the Italian government to the European Union there is one impact assessment macroeconomic that the acquired resources will have.
- However, it must be clarified: the financing money of the PNRR or Recovery Plan and also React-EU, 191.5 billion euros, is a debt that the European Union pays on the financial markets. This money is given to EU member states in two ways: through loans and grants. For Italy, loans amount to 122.6 billion euros out of the 191.5 total of the Plan. So it is money that will have to be returned. While 68.9 billion are non-repayable grants. Loans are a debt that states will have to the European Union and will be repaid from 2028-2058.
The money lent will have to bear fruit because the Italian State will be asked for the sum received. The Italian State will be able to recover these figures in 3 ways: by reducing expenses and therefore by cutting services to the community; increasing revenues and therefore increasing taxation; by issuing further public debt.
These 3 actions change their impact on the population depending on what the PNRR produces on the economy.
The Plan foresees for the years to come 3 types of impact possible.
The low-impact scenario speaks of a GDP growth of 0.9% in 2022, 1.4% in 2023, 1.5% in 2024, 1.7% in 2025 and 1.8% in 2026. It is the worst scenario that would not give Italy respite, worsening the current situation in the long run and bringing the national economy to its knees in the long run.
Then there is an average scenario which predicts growth of 1.1% in 2022, 1.6% in 2023, 2% in 2024, 2.4% in 2025 and 2.7% in 2026.
Finally the best scenario with growth of 1.2% in 2022, 1.9% in 2023, 2.4% in 2024, 3.1% in 2025 and 3.6% in 2026. promising that would allow the country to grow economically for years to come. It is easy to understand that the ability to repay the loan to the European Union is proportional to the country’s economic expansion capacity, with more or less significant effects on citizens’ lives.
For the implementation of the Plan very important will be the role played by the Prime Minister Mario Draghi that somehow, it is understood, is the real guarantee for the EU so that the Plan does not become unproductive and is lost in streams unable to regenerate the Italian economy.
The most complex aspect will be to try to make it work especially in the South and partly also in Central Italy, the most complex and troubled areas in the country, thanks to which Italy takes all these funds.
Here too it is easy to understand that the bureaucracy and the cumbersome dynamics of the Public Administration will become the number one enemy.
The control of the implementation of the Plan is in fact centralized in the monitoring and management actions of the central State. A special structure has been set up at the Ministry of Economy and Finance, which constitutes the contact point with the European Commission for PNRR. Then there is the control room for the PNRR, with the task of ensuring the monitoring of the progress of this Plan, the strengthening of cooperation with the economic, social and territorial partnership, and to propose the activation of substitute powers and the modifications regulations necessary for the implementation of PNRR measures. The Control Room is established at the Presidency of the Council of Ministers, has the task of verifying the progress of the Plan and the progress made in its implementation. Local administrations are also involved and are responsible for the implementation of specific interventions in their territories. “They are also responsible for initiating the procedures for the recovery and return of resources improperly used, or the subject of fraud or double public funding”.
To ensure the effective implementation of the PNRR, central administrations, regions and local bodies can benefit from actions to strengthen administrative capacity through “hiring expert staff” on a “fixed term” basis, “specifically intended for the structures responsible for implementing of PNRR initiatives, from planning to actual implementation “and” support from specially selected external experts “. The selection of temporary staff takes place with a simplified procedure.
It should be considered that the expenditure for investments in construction represents “32.6% of the total expenditure, followed by transfers to businesses (18.7%) and spending on IT and optical products (12.4%) “. Significant stakes are also held by R&D, research and development (6.2%) and by the “creation of IT platforms and databases (3.8%), directly related to digital innovation”. If the products of forestry are of great importance, they include expenditure on forestation, works for the development of the circular economy, interventions on hydrogeological instability and water resources management, those relating to the construction of plants relating to ecological transition, investments in ICT and electronic equipment, digitization and computerization will always be buildings (which also include works for the enhancement and restoration of cultural and archaeological sites) the driving force of the country to grow and have an expanding economy.
A limit and an unknown factor that raises doubts about the country’s ability to regenerate itself.