ECONOMY

Subsidies to Greece to hit a record next year

An unprecedented amount of European Union funds – totaling 7.5 billion euros – will flow into the Greek economy next year, Development Minister Costis Hatzidakis announced on Thursday in Brussels.

This concerns projects of the current funding period (2007-13) amounting to 3.5 billion euros, as well as mature projects that did not make it into the program but will be incorporated in the new funding program for 2014-20 with the prospect of immediate absorption.

Some 4 billion euros in EU funds is expected to enter the country’s economy by the end of the year. In previous funding programs, no money was absorbed during the first year as several procedures were required to create the new structures and the implementation programs. This time however, Hatzidakis said, the two subsidy programs will run in parallel, offering a lifeline to the Greek economy. The subsidy share of the European Union in jointly funded projects will remain at 90 percent up to 2020.

The government is also hoping that the Hellenic Investment Fund will start operating from early 2014 with resources from German investment bank KfW, the Greek state and independent entities such as the Alexander S. Onassis Public Benefit Foundation.

However, as the minister told reporters, the structural resources alone will not be enough as liquidity conditions in Greece are squeezing enterprises out of business – a point he made to his EU counterparts during the meeting of the bloc’s Competitiveness Council on Thursday in Brussels.

He did add that there are signs of stabilization on this front, as the quantitative targets set by banks and the ministry for supplying the market with cash have been attained.

“Liquidity will not be restored unless confidence is restored in the Greek economy and its prospects. This is what we are working towards, with three main tools: the privatizations, the fiscal adjustment and the structural reforms,” Hatzidakis stated.

The minister told his EU peers that the country’s economy is facing a number of obstacles, because “on the one hand the troika the European Commission, the European Central Bank and the International Monetary Fund] is asking us to strengthen our competitiveness, and on the other it demands increases in energy rates, asphyxiating our industries.”

As for restarting works on the country’s major highways, Hatzidakis said that Athens is expecting the Commission to respond by October 15 to its proposal regarding which projects will be excluded from EU funding to find an extra 1.2 billion euros for works to resume.