Exclusive: Italy risks missing Recovery Plan deadline due to EU concerns, sources say

By Giuseppe Fonte and Gavin Jones

ROME (Reuters) - Italy risks missing an April 30 deadline for submitting a final version of its Recovery Plan to the European Commission because Brussels is not satisfied with several aspects of the drafts presented so far, two sources close to the matter said.

A spokesman for Prime Minister Mario Draghi firmly denied that the deadline would be missed. "The plan will be presented on April 30," he said. An Economy Ministry spokesman said "our aim remains to present it on April 30".

A delay would be a blow to Draghi, who took office two months ago tasked with fine-tuning the plan prepared by the previous government.

All 27 European Union countries have been working on their national plans which spell out how each government wants to spend its share of the EU's 750-billion-euro ($900 billion) Recovery Fund joint borrowing scheme.

Italy is eligible for more than 200 billion euros in grants and cheap loans from the Fund, the biggest slice of any EU country. The money will be disbursed gradually over six years.

"The Commission is unhappy with the Recovery Plan as it stands," said one of the sources, who asked not to be named due to the sensitivity of the matter.

The source said Draghi would probably present the plan around mid-May, but a longer period may be required to overcome the Commission's objections.

Among Brussels' main concerns are a lack of detail over how the plan will be managed once it gets EU approval and the substance of some of the reforms outlined, including of the justice system, the source said.

Another source also said Brussels wanted changes to the plan, which would require time, and said mid-May now seemed a "realistic" period for its presentation.

Italy has not previously suggested it might be late, and Draghi told reporters on April 8 that "on April 30 we will deliver our plan".

A Commission spokeswoman said it had no comment to make on the Italian plan in particular, but the Commission understood that drawing up the Recovery Plans was a challenging task for all member states while they are also focused on tackling the COVID-19 pandemic.

While the plans should be presented by April 30 as a rule, some countries "may need a few more weeks," she said, and "quality should be the first priority". She added that the Commission was currently in "intensive dialogue" with all countries on the preparation of their plans.

BLUEPRINTS FOR SPENDING

Commission Vice President Valdis Dombrovskis said on Friday that some EU countries would miss the April 30 target date, without saying which ones.

Draghi's main mission on taking office, along with the COVID-19 vaccination campaign, was to present a solid Recovery Plan to ensure the flow of the EU funds to finally unleash growth for the chronically sluggish economy.

The national plans are blueprints for spending grants and loans that each EU country will get from the unprecedented joint borrowing by the Commission to rebuild economies greener and more digital after the COVID-19 pandemic.

In his comments on Friday, Dombrovskis said the delay in the submission of some plans would not push back the scheme as a whole, details of which still require ratification by some countries' parliaments.

Provided any delays in the presentation of the plans are not too long, and the ratification is completed in all member states by June, the Commission can make first disbursements in July, Dombrovskis said.

($1 = 0.8345 euros)

(Additional reporting by Jan Strupczewski in Brussels; Editing by Frances Kerry)