What are we going to do with 50 billion euros?


TAGS: Finance

As of early 2021, and in the following years, Greece will have more than 50 billion euros at its disposal – 22.5 billion in grants, 9.5 billion in low-interest loans from the European Union’s Recovery Fund and at least 20 billion from the 2021-27 National Strategic Reference Framework (NSRF, or ESPA in Greek). The main question is how this unexpectedly large amount of resources is going to be put to use. I believe the most obvious answer would be to give the country a general restart, a complete restart with the characteristics of a green economy, digital efficiency, flexibility and robust infrastructure. However, we can’t expect this to happen on its own. Vested interests, which prosper in conditions of underdevelopment, are seeking to divide these funds and redirect them into filling potholes and cracks in the familiar, outdated, parasitic capitalistic model.

To this end, we can expect to see the following: (a) recommendations to start spending these resources immediately, without a plan and without reforms – in other words, to spend in order to maintain the status quo; (b) eagerness to implement general tax cuts, instead of promoting growth that would produce new wealth that in turn would enable tax cuts; (c) suggestions from a few for carte blanche use of the resources, without having to carry out the reforms that we have already committed to in the framework of the European Semester, and without European surveillance and control of the content of the programs that we propose. This, of course, will not happen. All member-states will be under supervision, including Greece which is already subject to enhanced surveillance. And this is a very good thing.

It will be difficult to change the architecture of the recovery fund or to engage the “frugal four” in horse-trading. Whether we receive these funds will depend, I believe, on us. First of all, the 10-year national development plan, which is being prepared by a committee headed by Christopher A. Pissarides, winner of the 2010 Nobel Prize in economics, has to be completed and submitted by September (without doing so, no funding can be provided). The European Commission will sign binding “contracts” with the member-states in the fall for the goals that have been laid out per sector, as well as for the reforms they intend to implement. The respective programs will only then be submitted for funding. Their implementation, along with the implementation of the NSRF and the Public Investment Program, should be monitored by a technically competent expert mechanism – which does not currently appear to be ready.

Out of everything that needs to be done, the only thing that I am confident will be delivered on time is the 10-year national development plan. However, the toughest of the tasks ahead are, I believe, the long-overdue reforms – the legislation for (negligibly) improving schools is one recent disappointing example. These are reforms in the public administration (which should be abolishing red tape rather than “digitize” it), in the education system (perhaps we should as the Finns for advice in this area), in the National Health System (I hope that when the government talks about reform, it does not amount to ceding services currently offered by the public system to the private sector), and in the nightmarish system that allows some workers to retire at the age of 50.

Greece needs reforms across the board, but they do not appear to be anywhere on the horizon. Even odder is that no one in charge seems to care.