Italy gets EU backing to revise its post-COVID recovery plan

By Giuseppe Fonte and Sudip Kar-Gupta

ROME (Reuters) -The European Commission said on Friday it had given a positive assessment of Italy's proposals to revise its post-COVID recovery plan, including investments and reforms to make the country's economy greener under the REPowerEU scheme.

Implementation of the plan is seen by investors and rating agencies as an important measure of Italy's ability to support economic activity and keep in check the country's creaking public finances.

Prime Minister Giorgia Meloni said "the government has done a job it can be very proud of", while her office argued the updated plan would result in "an additional 21 billion euros" ($22.9 billion) designed to boost Italy's growth.

The overall investment programme is now worth some 194.4 billion euros in loans and grants and covers 66 reforms - seven more than in the original plan - and 150 investments, the European Commission said in a statement.

Italy was originally due to receive 191.5 billion euros through 2026 under the Recovery and Resilience Facility (RRF), the main component of the European recovery fund.

However, Rome fell behind schedule both in spending the tranches of cash that arrived from Brussels, and in meeting policy targets to trigger the release of fresh payments.

As a result, Meloni launched talks with Brussels to revive the plan by shelving some of the original projects and adding new ones.

The REPowerEU scheme strengthens the recovery fund and is part of the bloc's efforts to end dependence on Russian fossil fuels and accelerate the green transition.

Italy's REPowerEU chapter consists of investments and reforms mainly focused on strengthening electricity and gas networks, energy security, and speeding up renewable energy production.

State-controlled firms such as gas and power grid operators Snam and Terna, Italy's biggest utility Enel and energy group Eni are all expected to receive part of the funds.

The revised recovery plan also devotes 25.6% of its total allocation to support Italy's digital transition, up from 25.1%.

EU leaders now have four weeks to endorse the Commission's assessment, allowing Italy to receive half a billion euros in pre-financing of the REPowerEU funds.

Italy has so far received 85.4 billion euros under the RRF and the government aims to get another instalment worth 16.5 billion by the end of the year.

EU Affairs Minister Raffaele Fitto said Italy would spend all money it is entitled to, adding the projects removed from the post-COVID plan would not be scrapped but funded with separate EU funds.

($1 = 0.9168 euros)

(Writing by Giuseppe Fonte, editing by Gavin Jones, Kirsten Donovan and Susan Fenton)