Thanks to a deal signed on Thursday between the government and the European Bank for Reconstruction and Development, funds of up to 500 million euros per annum are set to come to Greece up until 2020, with the likely recipients being small and medium-sized enterprises (SMEs). The lender is also set to open an office in Greece.
The five-year deal effectively signals the start of the lender’s activity in this country. It was ratified by the EBRD board in late February after years of negotiations and was signed yesterday in Tbilisi, Georgia, by Economy Minister Giorgos Stathakis and representatives of the bank in the context of its annual meeting.
In a statement published on Thursdayday, the Economy Ministry stressed that the agreement holds great significance for the local economy as it can contribute to the country’s financial recovery and strengthen the cash flow to Greek businesses, particularly SMEs, as well as employment. Sources say that Greece can start drawing recycling loans as early as this year.
Although Greece is part of the developed world, the EBRD has agreed to grant it recipient country status given its financial hardship. According to statements made a couple of months ago by EBRD Chairman Suma Chakrabarti, Greece could get more than 2.5 billion euros by end-2020, which could reach up to 5 billion euros through leveraging. He added that there will be no ceiling to the funds issued to Greece as the amount will depend on the projects proposed for funding. He said he expected the first project proposals to come in the next few months.
The next stage of the agreement will provide for the EBRD to gain a physical presence in Greece, too, with the opening of an office in this country as early as this year.
However, Chakrabarti warned on Thursday in Tbilisi that a possible Greek exit from the eurozone is one of the risks that threatens the banks members, and that if the country leaves the euro area the implementation of the agreement just signed would become complicated.