Draghi continues Italian reform drive with new spending watchdog

Mario Draghi’s government has established a watchdog to oversee Italy’s ambitious €248bn reform programme, including how billions of euros in EU pandemic relief funds is spent, and introduced a swath of measures aimed at curbing bureaucracy and speeding up infrastructure development.

The new “technical secretariat”, which will report to the prime minister’s office, will remain in place for five years and is one of several governance bodies set up by Draghi’s national unity coalition to supervise the spending of €205bn in EU grants and loans from the bloc’s coronavirus recovery fund.

The body was set up through a cabinet decree. By running beyond the lifetime of the coalition, whose term must end before 2023 at the latest after Italy’s next general elections, it will reduce uncertainty over the reform programme once the former European Central Bank chief steps down as prime minister.

Draghi was asked to form an emergency government in February after Italy’s last administration collapsed. He is not expected to continue as prime minister beyond the next election.

Draghi told lawmakers in April that “the destiny” of the eurozone’s third-largest economy and its “credibility and reputation” as a founder of the EU depended on the success of the reforms. These aim to relaunch an economy that has not only been battered by the pandemic but has barely grown in real terms since the turn of the millennium.

Italy is set to receive one of the largest shares of the EU’s €750bn Recovery and Resilience Plan, launched last year to help member states recover from the pandemic. Other funding for the reform programme will come from the state budget.

Since taking office Draghi has announced plans to overhaul the country’s notoriously slow bureaucracy and legal systems and invest the EU funds in infrastructure projects, climate and environmental initiatives, digitising the economy, education and health.

Rome has promised the European Commission it will set up governance mechanisms to monitor its spending plans ahead of unlocking the EU money, of which the first tranche is expected to be disbursed to Italy this summer.

The same decree, approved by the Italian cabinet on Friday evening, established a mechanism for the finance ministry to update the commission regularly on the progress of the reforms and investments. It also gave the ministry new anti-corruption functions that will focus on preventing fraud and monitoring conflicts of interest.

The decree includes multiple measures to speed up public works, including the construction of high-speed rail. There will also be bonuses and fines for contractors based on the speed with which they complete projects.

Other reforms include a reduction in the maximum amount of time Italian authorities have to approve the installation of telecoms infrastructure, down from six months to 90 days, and measures to make it easier for companies carrying out public contracts to hire subcontractors.

Draghi has appointed a number of non-politicians to important roles in his government in a mixed cabinet of technocrats as well as politicians from most of the country’s largest parties.

They include close Draghi allies, such as economy minister Daniele Franco, a former senior deputy governor of the Bank of Italy, and minister for technological innovation and digital transition Vittorio Colao, the former Vodafone chief executive.

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