What funds are earmarked for Southern Italy in the coming years?

20 April 2021

"This year we are planning the investments of a decade that can change Italy. The choices to be made over the next few months can open up a season of extraordinary development.” Minister Carfagna stated it when addressing the subject of EU and national resources (either already defined or being programmed), which will be earmarked for Southern Italy in the years to come.

The same concept was reiterated by President Mario Draghi at Palazzo Madama (Senate headquarters), during his reply to the parliamentary debate on the PNRR, Italy’s National Recovery and Resilience Plan. "Resources will always be scarce if they are not used," Draghi said. "It is true that Italy has obtained the most relevant share of European funds because of the extent of its territorial gaps to be bridged, but it is also true that the EU is now asking for these gaps to be narrowed through effective actions and reforms, not through a mere accounting allocation of resources." And again: "The National Recovery and Resilience Plan has a five-year time constraint. This is not an alibi, it is fact. And it must also take account of Southern Italy's historical difficulties in absorbing public funds."

Below a concise list of the main intervention tools and resources earmarked for Southern Italy over the next few years. All these funds are complementary: they add up and do not overlap. Moreover, these specific intervention plans are additional to the resources annually allocated by the State budget for investments in Southern Regions, which cannot be less than 34% of the amount allocated at national level.

 

National Recovery and Resilience Plan (PNRR)

Italian “chapter” of the broader EUR-672.5-bln European Plan aimed at supporting the reforms and investments undertaken by Member States to mitigate the socio-economic impact of Covid-19 pandemic and prepare their economies for challenges such as the ecological and digital transitions. Italy will receive EUR 191.5 bln, plus further EUR-30.6-bln State resources from the so-called Complementary Fund to finance selected projects that, due to multiple reasons, are not eligible to PNRR funding.

Southern Italy will receive 40% of place-based funds (for projects tailored onto specific territories), i.e. approximately EUR 82 bln out of a total of EUR 206 bln.

As announced by President Draghi, a further EUR-9.4-bln appropriation will be added to the Complementary Fund and exclusively directed to completing the Salerno-Reggio Calabria high-speed railway line, partly financed within the PNRR.

 

React-EU

Second largest plan in the European “Next Generation EU” package: EUR 50.6 bln (at current prices). Italy will receive EUR 13.5 bln (the largest share), of which EUR 8.4 bln earmarked for Southern Italy. These resources will be added to those already earmarked for the 2014-2020 EU Cohesion Policy cycle and will be disbursed in 2021 and 2022 for projects to be implemented by 2023. Being it the responsibility of the Minister for Southern Italy and Territorial Cohesion to programme these funds, Minister Carfagna issued an ad-hoc plan for using such resources effectively, by now transmitted to the European Commission.

 

European Structural and Investment Funds

Main ordinary instruments of EU Cohesion Policy, financed through the EU budget (Multiannual Financial Framework) and organised in seven-year cycles: the next one, whose plans are currently being finalised, covers the 2021-2027 period and allocates approximately EUR 42 bln to Italy, plus EUR-40-bln national and regional co-financing. Southern Regions will receive overall EUR 54.23 bln.

The resources specifically concern five funds: the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund (for less developed Member States), the European Agricultural Fund for Rural Development (EAFRD) and the European Maritime and Fisheries Fund (EMFF). The strategy and priorities in the use of these funds are defined by a Partnership Agreement signed by each Member State with Brussels, in the framework of the common objectives for the next cycle to create a smarter, greener, connected, social and citizen-friendly Europe.

Following the preparatory work, the Minister for Southern Italy and Territorial Cohesion is working on the definition of the Partnership Agreement for the 2021-2027 cycle, which will then be translated into the National Operational Programmes (NOPs, managed by the central government) and Regional Operational Programmes (ROPs, managed by Regions).

 

Development and Cohesion Fund (FSC)

National fund that, like the above-mentioned European funds, finances projects aimed at fostering economic, social and territorial cohesion across the Country and removing inner socio-economic imbalances. The 2021 Budget Law allocates overall EUR 50 bln to the national Development and Cohesion Fund (FSC) between 2021 and 2030, and another EUR 23 bln will be added with the 2022 Budget Law. Eighty per cent of this amount is reserved by law for the Mezzogiorno area, which will thus receive EUR 58 bln.

EUR 15.5 bln from the FSC is advanced to finance projects under the PNRR, and the Complementary Fund launched by the Council of Ministers on 29 April 2021 increases the FSC resources by the same amount. As a result, the overall share of the Fund remains unchanged.

In addition, further EUR-24-bln resources have been programmed and allocated for the 2014-2020 cycle and not yet spent by relevant administrations.

 

Just Transition Fund

European programme under the “Next Generation EU” aimed at Member States’ ecological transition through economic diversification and reconversion of territories. Italy will receive EUR 1.2 bln for reconverting the former Ilva plant in Taranto and redeveloping the Sulcis region in Sardinia.

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