The government is expecting a growth boost to the tune of 1.5-2% of gross domestic product for the next three years through the EU Recovery Fund, if it is approved, based on a proposal the European Commission will submit on Wednesday.
This is the biggest post-lockdown weapon aiding the return to growth, with Greece anticipating at least 8-10 billion euros, while the amount due could be far higher. Sources say Prime Minister Kyriakos Mitsotakis has already spoken with Commission President Ursula von der Leyen ahead of the submission of the Commission’s proposal, formed on the basis of a French-German agreement for a €500-million fund.
Athens is particularly pleased by the fact that the assistance, according to the proposal, will be granted in the form of grants and not loans that would add an additional burden to Greece’s national debt. Of course this would need to be approved by Austria, which voiced its opposition from the start, but also by Sweden, Denmark, Finland and The Netherlands.
Another plus for Greece is a provision that the assistance will be allocated on the basis of the damage suffered by each country’s economy as a result of the coronavirus. Given that Brussels said in its spring forecasts that Greece will experience the biggest GDP reduction in the European Union, it should also get the most support, in proportional terms.
There is a question as to whether the impact on national health systems will be factored in, which would be relatively small for Greece. However, Bloomberg reported recently that Greece would definitely be among the EU states to benefit most.
The fund’s resources will allow the government to finance growth-minded policies that have been pushed aside at this point, such as the reduction of social security contributions. Kathimerini understands that the government plans to provide for the immediate reduction of taxes and contributions on labor.
Other tax breaks are also due, Finance Ministry officials assure, for when the bridge program announced last week expires.