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Draghi heading to Parliament to explain the details of his plan

26 Apr 2021 11:18 AM

Mario Draghi, the Italian Prime Minister, is scheduled to go to Parliament today to present the details of his plan of 235 billion euros (284 billion dollars), to re-engineer the Italian economy, which will be a test for the European Union's post-pandemic recovery fund.

Draghi's plan benefits 191.5 billion euros as grants and loans from the European Union, in addition to 30 billion euros from domestic financing, and other small sums from separate EU funds. The Prime Minister estimates that the investment will boost GDP by at least 3.6%. Draghi is seeking parliamentary support before the deadline of April 30 to present the plan to the European Commission.

The plan allocates 40% of the funding for green energy projects and 25% for digital projects, as requested by the European Union, and a large part of the spending has been allocated to infrastructure, modernization, and expansion of the railway system in Italy and the provision of high-speed trains, about 40% of the plan's resources goes to the southern regions.

Italy was the epicenter of the outbreak of the Coronavirus in Europe, and the repercussions pushed the economy to the deepest recession since World War II. Italy is the largest beneficiary of the European Union's Epidemic Fund, which is worth 800 billion euros, and this will be a test of the speed of the return to normal life again in the Union European.

Draghi is convinced that Europe’s economies will be stronger in the long run if fiscal and monetary authorities work together to restore them as quickly as possible. While this means a debt build-up in the short term, the alternative may be a cycle of half measures and thin enlargement that leaves Italy and the European Union increasingly behind the United States and China.

The additional spending will push Italian debt to nearly 160% of output this year, higher than the 159.5% touched after the devastation of World War I and more than twice the EU's benchmark level of 60% for joining the euro.

Italy's branching political parties put Draghi at the head of a national unity government this year to end the political stalemate and stem the epidemic. Italy has vaccinated only about 8% of its entire population and will likely miss the target of reaching 500k daily shots by the end of April.

Draghi, who headed the European Central Bank for eight years to 2019, still has broad support among the majority of Italian political parties, which means his plan must face little opposition in the legislature.

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