The Government prepares the plan to be sent to Brussels to obtain the funds from the Recovery Fund. Italy should go to 87 billion in subsidies and 120 billion in loans, vital resources to restart the country and to implement those reforms that have been in the drawer for years. This is why it is very important not to waste the money that will arrive, but to use it to change gears for the country. "The effective benefits that Italy will be able to obtain from the use of the funds of the new instrument will depend on the country's ability to propose interventions capable of help boost growth potential cost-effective, consistent with the objectives and requirements of the program, and to implement them quickly and without waste,” he said Fabrizio Balassone, Head of the Economic Structure Service of the Bank of Italy, in a hearing before the Budget Commission of the Chamber.
“The resources of the new European instrument can help start the recovery of the delays accumulated by the Italian economy in the last thirty years; the main problem of our economy has been, for over 20 years, that of low growth, in turn a reflection of the weak dynamics of productivity", added Balassone indicating the priorities that the Government should follow to achieve the desired goal: "It is possible to identify at least three macro areas in which interventions appear equally urgent: public administration; innovation; safeguarding and enhancing our natural and historical-artistic heritage”.
In doing so, underlines the economist, "the effects of a renewal action of the public administration, of the traditional and innovative infrastructures, of the school can be particularly relevant to the South. In the southern regions, the environment in which businesses operate must first of all be improved, primarily with reference to the protection of legality. The technological gap to be filled is greater, the effectiveness of public policies is less, and the completion of investments is more difficult”.
According to Balassone, "the national plan for recovery and resilience must also be based on the essential objective of achieving a substantial, progressive and continuous rebalancing of public finances. Above all, the revival of growth can contribute to this, which will only be possible if resources are used productively; otherwise the country's problems would be increased, not alleviated, by the increased debt”.
For Bankitalia, “the impact on the economy will also depend on the improvement of the context in which it takes place the business activity. It would be risky to assume that the availability of greater resources can automatically translate into sustained and lasting economic growth without a continuous commitment to improve the quality of public action”.
Finally, Balassone explained two scenarios developed by Bank of Italy. “Both scenarios – he explained – presuppose that the funds available for Italy, which are assumed to be equal to 120 billion for loans and 87 for transfers, are used fully and without inefficiencies, with a uniform distribution of spending in the five-year period 2021 -2025”.
The higher investment expenditure deriving from the Recovery Fund, estimated at over 41 billion a year, "could result in a cumulative increase in the level of GDP of about 3 points percentages by 2025, with an increase in employment of around 600.000 units”.
In the second scenario, “it is assumed that a significant part of the resources, equal to 30 per cent, is used for already planned measures and that only about two thirds of the remaining part is destined to directly finance new investment projects. Under these assumptions, the additional interventions would amount to around 29 billion a year, of which only 19 for investments. The cumulative impact on the level of GDP would reach almost 2 points percentages in 2025”.
