Policy Brief 55 - An Evaluation of the Italian National Recovery and Resilience Plan
Italy risks ending the NRRP period more indebted than before, without having solved its structural weaknesses. A Policy Brief by Tito Boeri, and Roberto Perotti
Executive Summary
Italy is the major recipient of the Next Generation funding. Thus, its experience with the National Recovery and Resilience Plan (NRRP) can be very informative also for other countries. In this study we provide an overview of the issues raised in the implementation of the Italian RRP together with some concrete examples of programs and reforms planned with the facility.
This experience is valuable also for countries that have been receiving (and requesting) smaller allocation of the NextGen facility because it documents the hurdles facing multi-year public investment planning and multi-level governance (local, national, supra-national) of reforms.
Our broad conclusion is that there are problems on both, multi-year planning and multi-level governance, that have not been satisfactorily addressed. As a result of these failures, Italy risks ending the NRRP period more indebted than before, without having solved its structural weaknesses. Reforms were not carried out. Most programs were only partly implemented. Italy treated the NRRP as a spending race, rather than as a development strategy.
Moreover, there is an overall lack of transparency about the progress made in reaching the targets. This limits also the capacity of European supranational authorities to monitor progress. Surprisingly there has to date been little pressure from the European Parliament to increase this transparency.
The attention of European institutions and media is currently concentrated on the delays in the implementation of the plan. This is certainly a key issue, but there are also other fundamental design flaws that should not be overlooked. Here are main points that we identified:
Excessive size and haste – The Plan was developed in the aftermath of the Covid pandemic with the ambition of providing a rapid response to the crisis. However, developing a coherent public investment plan at such a large scale requires time. Italy rushed to take all EU loans without a coherent spending plan, leading ministries to invent projects hastily, many of which were trivial or unfeasible. Subsequent revisions of the plan did not improve matters. The Commission should have not encouraged Governments to make full use of the facility when a coherent plan was not ready and public administrations were not equipped for such a task (see point 2).
Administrative overload – The public administration lacked the capacity to design, implement, and monitor thousands of projects, as those involved by the investment and reforms envisaged in the NRRP. Simplifications in the procurement could encourage cutting corners rather than promoting efficiency. The reform of the procurement procedures was considered a pre-requisite for the implementation of the NRRP, but it was diluted in its ambition to centralize tenders.
Grossly inflated expected benefits. In selling the plan to the country, successive governments advertised completely unrealistic expected benefits from the reforms (which were, in most cases, nearly at zero cost). The Commission should have induced a more realistic economic projection.
Monitoring gaps – €237 billion dispersed across countless projects are nearly impossible to track. This is even more difficult for the European Commission. Thus, there is inadequate control from the funders and from public opinion at large. Needless to say, this also prevents a proper evaluation of what worked and what did not.
Formalism over substance – The presence of milestones and targets introduced a culture of planning in the Italian public administration and marked an important innovation of performance-based funding in EU instruments; at the same time, however, it fostered a “spreadsheet culture”: chasing numbers to unlock EU payments rather than achieving real impact.
Unrealistic targets. Targets that were in many cases downright unreasonable were also part of the selling pitch. Not surprisingly, in all the cases analysed in this report they had to be drastically downgraded, in some cases by more than half. Yet another example of the lack of social control is that, in virtually all cases, the participants in the debate are unaware of these large changes in targets.
Neglect of maintenance and the post-2026 future – Little consideration was given to the costs of maintenance of the investments made with the NRRP. Many structures (e.g., schools, health centres, databases) may decay quickly once EU funding is interrupted.
Social myopia – The Plan underinvested in social inclusion, marginalized groups, and urban degradation—issues crucial to long-term growth (also in light of the faster than expected demographic decline) and civic wellbeing.
This Policy Brief is part of a broader discussion that provides an initial assessment of the impact and policy implications of the Next Generation EU programme as it nears completion.
IEP@BU does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
