FILE PHOTO - Florence skyline, viewed from Piazzale Michelangelo, virtually deserted as Italy battles a coronavirus outbreak, in Florence
FILE PHOTO - The Florence skyline, viewed from Piazzale Michelangelo, virtually deserted as Italy battles a coronavirus outbreak, in Florence, Italy, March 7, 2020. Reuters

Italy will spend around 13 billion euros ($12.62 billion) less this year in European post-COVID recovery funds than it previously targeted, a Treasury document showed, underscoring the country's problems in implementing investment programmes.

The euro zone's third largest economy is eligible for around 191.5 billion euros in grants and cheap loans from the EU's Recovery and Resilience Facility (RRF) designed to help the bloc's 27 countries recover from the pandemic.

The Treasury's annual Economic and Financial Document (DEF), seen by Reuters but not yet published, said almost 21 billion of 191.5 billion would be spent by the end of this year, leaving a further 170 billion still to be invested through 2026.

The latest estimate compares with a previous goal of 33.7 billion euros which was made in April, according to the DEF.

In recent years, Italy has consistently underperformed its European partners on using financial help from Brussels. It managed to spend only half its regular EU funds in the last budget cycle, the second lowest share after Spain.

In the introduction to the DEF document, Economy Minister Daniele Franco said the downward revision was due to the delayed launch of some public works, hurt by surging raw materials prices.

Early this year Prime Minister Mario Draghi earmarked more than 10 billion euros through 2026 to help construction firms cope with sky-high energy bills and other costs exacerbated by the Ukraine war, in an attempt to avoid delays.

As long ago as April the Treasury admitted that spending was going slower than planned, and accordingly cut its estimate of the growth impact of the EU funds and the reforms it must implement to obtain them.

The Treasury believes it can make up for lost ground and in the DEF it raises its estimate for spending the EU funds in 2023 by 12 billion euros.

"The most recent update of the public expenditure projections significantly reduces the estimate for 2022, but correspondingly increases the projections in the final years of the plan," the Treasury said.

Rome has so far secured almost 67 billion euros of EU funds by meeting the policy "targets and milestones" agreed with Brussels. Some 46 billion have already been received.

It is eligible for a further 19 billion euros at the end of the years provided it can complete the 55 targets and milestones set for the second half of 2022.

($1 = 1.0302 euros)