Greece, the European Union’s most indebted member, will receive financing from the European Bank for Reconstruction and Development through 2020 to promote an economic overhaul.
The London-based lender, which is owned by 64 countries, the EU and the European Investment Bank, aims to end a dearth of capital among Greek private companies, in particular small and medium-sized businesses, EBRD President Suma Chakrabarti said in Brussels on Tuesday.
“There are two broad areas where the EBRD might well make a number of operations: firstly helping Greek companies regain access to finance,” Chakrabarti said. “The other area we’d like to do more to promote is regional economic integration, bring private sector knowledge and finance to such areas as energy and infrastructure.”
Last month, euro-area finance ministers approved a four- month extension of Greece’s bailout program after the government pledged to revamp tax collection, consolidate pension funds and maintain sales of state-owned assets.
As part of the agreement, the European Commission, the ECB and the International Monetary Fund all signaled their support for Greece’s commitments. The country can’t tap more bailout funds, including the next portion of about 7 billion euros ($7.8 billion), unless it passes the authorities’ review. Greece, whose debt stood at 176 percent of gross domestic product in 2014 according to the EU Commission, has since 2010 obtained bailouts pledging 240 billion euros and the biggest debt restructuring in history.
The country remains short of cash and cut off from financial markets, with the threat of wider contagion ever present. The EBRD also seeks to expand Greek private enterprises’ role in infrastructure and energy projects.
“We can get going straight away, as soon as we find the right projects,” Chakrabarti said.
The Greek government asked to become a recipient of EBRD funding in November and the government of Alexis Tsipras, which came into power after an election in January, stood by the request.
Greece, an EBRD shareholder since its 1991 inception, has contributed 2.3 billion euros to EBRD funding across emerging Europe, especially in the neighboring Balkan region. The EBRD supported the subsidiaries of Greek banks in Romania, Bulgaria and some former Yugoslav republics during the global financial crisis.
The EBRD invested 8.9 billion euros last year. The bank expanded its geographical scope to include nascent democracies in North Africa and the Middle East in 2011 and currently lends and invests in 35 economies. Cash-strapped Cyprus became a recipient last year and, like Greece, will get funding through 2020.