13 January 2021

"After tonight's approval by the Council of Ministers, the next step will lie in improving the Plan together with the Parliament, Regions, local authorities and social partners. For a simpler, more sustainable and secure Italy", Vincenzo Amendola, Minister for European Affairs, declared on Twitter.

The Council of Ministers approved the draft National Recovery and Resilience Plan, which will now be submitted to the Chamber of Deputies and the Senate of the Republic.

The National Recovery and Resilience Plan

The National Recovery and Resilience Plan (Italy's PNRR) is to implement the Next Generation EU programme in Italy, launched by the European Union to complement the 2021-2027 Multiannual Financial Framework (MFF) in light of the economic and social consequences of the COVID-19 pandemic.

The national relaunch action outlined in the Plan is guided by policy objectives and actions linked to the three strategic axes agreed upon at European level: digitalisation and innovation; ecological transition; social inclusion.

The Plan enables radically addressing the deep transformations brought about by the twin ecological and digital transitions, which require strong public-private cooperation. Furthermore, through an integrated and horizontal approach, the aim is to strengthen women's role and combat gender discrimination, enhance young people's employment skills and prospects, and territorial rebalancing and development in the Mezzogiorno region. These priorities are not entrusted to single interventions linked to specific components; rather they are pursued transversally.

The Plan encompasses six missions, representing structural "thematic areas" of intervention:
1. Digitalisation, innovation, competitiveness and culture;
2. Green revolution and ecological transition;
3. Sustainable mobility infrastructure;
4. Education and research;
5. Inclusion and cohesion;
6. Health.

Overall, the missions encompasses 16 components aimed at achieving the socio-economic objectives set out in the Government's strategy, broken down into 47 lines of intervention to ensure homogeneous and coherent projects.

The total resources allocated to the 6 missions pursued by the PNRR amount to approximately EUR 210 billion: EUR 144.2 billion will finance "new projects", while the remaining EUR 65.7 billion are earmarked for "existing projects", which within the PNRR will experience significant implementation and spending acceleration.

With the Plan, the Government intends to maximise the resources allocated to public investment (higher than 70 %), while incentives for private investment are around 21 %. With the not-yet-programmed national resources from the national Development and Cohesion Fund (Fondo Sviluppo e Coesione – FSC) 2021-2027, investment resources are increased to approximately EUR 20 billion for new projects in relevant domains, including high-speed rail, integrated ports, sustainable local transport, broadband and 5G, integral waste cycle, and socio-sanitary infrastructures in the Mezzogiorno region.

Individual investment projects were selected based on criteria aimed at concentrating interventions on transformative actions with a greater impact on the economy and employment. The identification and definition of both "existing projects" and "new projects" was also geared towards such criteria. The reforms required to effectively fulfill each mission are also outlined in the Plan.

The first 70% of the grants will be committed by end-2022 and spent by end-2023. The Plan also provides that the remaining 30% of the grants will be spent between 2023 and 2025. Total loans will increase over time, in line with the objective of maintaining a high level of investment and other expenditure, against the trend. In the first three years, most investments and "new projects" (and thus the macroeconomic stimulus against the baseline scenario) will be supported by grants. Over 2024-2026, on the other hand, the largest share of funding for additional projects will result from loans.

The PNRR will have a positive impact on key macroeconomic variables and indicators of inclusion, equity and sustainable development through the increased investments it will trigger directly/indirectly and the technological innovations it will introduce and stimulate. These effects will be heightened by context and sectoral reforms addressed by the individual components of the Plan. The overall impact of investments, transfers, incentives, reforms, and the multiplier effect attainable by leveraging several project lines of the Plan will be feasible once all project details and related reforms have been fully defined. (Source: Italian Government)