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How does Italy plan to spend its €222bn share of COVID recovery cash?

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Italian Premier Mario Draghi addresses the media during a news conference, in Rome, April 16, 2021.
Italian Premier Mario Draghi addresses the media during a news conference, in Rome, April 16, 2021.   -   Copyright  Remo Casilli/Pool via AP
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Mario Draghi will on Monday present his plan to spend the €222.1 billion Italy will receive to kickstart its COVID-hit economy.

The country has the biggest share of the European Union's €750 billion pandemic recovery fund and the political infighting over how best to spend that money is what brought Draghi, a former European Central Bank governor, to office as prime minister.

The plan is heavy on investments to modernise and digitise Italy’s economy and bureaucracy and encourage environmentally sustainable development.

Both are directed particularly at the all-important tourism industry which accounts for 13 per cent of Italy’s gross domestic product and was devastated by pandemic-related closures.

Here are the plan's key points.

Digital and employment

Over a quarter of the money has been earmarked to digitally transform the economy and public administration, broadening access to high-speed internet service, especially in schools, and providing incentives to the private sector to digitise.

Around €22.4 billion is aimed at “social inclusion” investments and programmes to boost training and employment opportunities for women and help cities improve access and opportunities for disabled people.

The aim of both, coupled with increased daycare spots, is to remove obstacles that have traditionally kept Italian women at home caring for the young, old, sick and disabled.

Women accounted for more than half the 456,000 jobs lost in Italy last year.

The plan envisages the Italian economy, which shrank 8.8% last year, will grow 3.6 percentage points beyond base forecasts in 2026 and that its employment rate will grow 3.2 percentage points.

Sustainable development

The EU required that at least 37 per cent of its funds be directed toward climate-related investments, part of the bloc’s aim for a cut of 55 per cent of greenhouse gases by 2030 and carbon neutrality by 2050.

Italy’s plan is directing 40 per cent overall, or €68.6 billion, to green-related investments and initiatives: boosting recycling, overhauling public transport systems to favour low-emission vehicles, and reducing water waste through improvements to waterways.

The plan calls for some €31.4 billion in transportation infrastructure improvements and extending high-speed rail lines across the peninsula, especially in the underserved south.

Education and research

Among other things, the plan aims to create 152,000 more daycare spots for babies and 76,000 for preschoolers, addressing a structural shortage that has long dissuaded parents from having children and women from working.

Other destinations for the €31.9 billion investment in education and research is to spiff up dilapidated school buildings and get them better wired and revamp the higher-education curriculum to encourage more students to pursue higher degrees.

Healthcare

The €18.5 billion investment in health care aims to reinforce in particular the general medicine and preventive care provided at the local level, with a strengthening of home care and telemedicine. Digital infrastructure improvements aim to improve data analysis.

Other reforms

Italy’s lethargic justice system and cumbersome bureaucracy have long been accused of discouraging foreign investment since lawsuits and criminal trials can last for years and securing permissions to do just about anything can take a similarly long time.

The justice system reform aims to reduce the backlog of court files with temporary hires while revising norms and procedures to encourage more recourse to mediation.

Other reforms are focused on modernising Italy’s old and outdated public administration, aiming to increase turnover to get more young people hired, digitise systems, simplify procedures for permits and boost competition particularly in public services and utilities.