Greece Sees EU Crisis Funds as Game-Changer for Stricken Economy

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The Greek government led by Prime Minister Kyriakos Mitsotakis sees the European Union’s Next Generation plan to fund economic recovery as a game-changer for a country reeling from the pandemic while still trying to emerge from a decade-long debt crisis.

Government proposals for allocating money from the EU’s recovery and resilience fund represent “a bridge to the after-pandemic era” that could add 7 percentage points to economic output over the next six years, Mitsotakis said Wednesday at a presentation of the plan. That would come on top of “normal” growth, he said.

Greece’s final plan for use of the funds focuses on four main areas: digital transition; employment, training, and social cohesion; the green economy; and boosting investment.

Greece Sees EU Crisis Funds as Game-Changer for Stricken Economy

“It’s a gigantic program that has potential to mobilize around 57 billion euros ($67 billion),” with 32 billion euros in secured funds and grants from the recovery fund and 25 billion euros from the private sector, Mitsotakis said.

It could also lead to the creation of 200,000 new jobs, Mitsotakis said. While unemployment fell to 16.3% in 2020 from a crisis peak of around 30%, it remains the highest in Europe. Greece’s economy shrank 8.2% in 2020, adding to a cumulative decline in gross domestic product of around 25% during the debt crisis.

Green Projects

More than 37% of grants will be directed to green projects including the interconnection of Greek islands, a massive program to boost energy efficiency for residential, commercial and public-sector buildings, smart metering, energy storage projects and infrastructure development for electric vehicles.

“Next Generation funds constitute a significant opportunity for Greece to implement additional reforms, to invest in the future and to grow its economy,” DBRS Morningstar said in a March 29 report, warning that “a strong government commitment will be needed along with increased administrative capacity to deal with the volume of funds.”

Greece’s plan is “the first kilometer of a marathon that will be completed when all the resources have been absorbed by 2026,” Mitsotakis said.

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