Draghi to tell parliament how ‘he’ll spend billions in EU aid’

Bloomberg

Prime Minister Mario Draghi goes to Parliament to present details of his 235 billion-euro ($284 billion) plan to re-engineer Italy’s economy that
will be a test of the European Union’s (EU’s) post-pandemic recovery fund.
Draghi’s plan taps 191.5 billion euros in EU grants and loans plus 30 billion euros in domestic funding and other small amounts of separate EU funds. The premier estimates the investment will boost gross domestic product by at least 3.6%. He is seeking parliamentary backing ahead of an April 30 deadline to submit the plan to the European
Commission.
Draghi’s plan earmarks 40% of funding to green and 25% to digital projects, as requested by the EU. A large chunk of spending is also slated for infrastructure, modernising and expanding Italy’s rail system and providing the impoverished south with high-speed trains. Some 40% of the plan’s resources are destined for southern regions.
Italy was the epicenter of Europe’s initial outbreak of Covid-19 and the fallout pushed the economy into the deepest recession since World War II. The country is the largest beneficiary of the EU’s 800 billion-euro pandemic fund and will be a test case for the speed of the rollout of the EU lifeline.
“Draghi’s plan will be watched closely, in Italy and at the EU level,” said Lorenzo Pregliasco, political analyst at YouTrend. “He made the plan, along with the vaccination campaign, as the pillar of his government action. He’ll need to show he can deliver on the implementation.”
Draghi is acting from the conviction that Europe’s economies will be stronger in the long run if fiscal and monetary authorities work together to jolt them back to health as soon as possible. While that means running up debt in the short run, the alternative might be a cycle of half-measures and anemic expansion that leaves Italy and the EU increasingly lagging the US and China.
The extra spending will push Italian debt near to 160% of output this year, higher even than the 159.5% touched after the devastation of World War I and more than double the EU’s 60% reference level for joining the euro.
Italy’s fractious political parties placed Draghi at the head of a national unity government this year to end a political stalemate and stem the pandemic. Italy has fully vaccinated only about 8% of its population and is likely to miss a target of reaching 500,000 daily shots by the end of April.
Draghi, who headed the European Central Bank for eight years until 2019, still has broad support among the majority of Italy’s political parties, meaning his plan should face little opposition in the
legislature.