ECONOMY

Racing after European funds

racing-after-european-funds

The government is racing to come up with a plan that will bring in – sooner rather than later – the €32 billion in funds that have been allocated to Greece from the European Recovery Fund.

On average, the funds that Greece can potentially absorb – and the onus for a 100% absorption falls entirely on the country, as nothing is a given – represent about 2.5% to 3% of its GDP over the next six years.

All we know is that, in 2021, Greece is going to receive only 10% of the total – €3.2 billion that is. We also know – and there’s the difficulty – that, whatever projects are approved for funding, implementation contracts for 70% of the funds – that is €22.4 billion of the €32 billion – must have been signed by the end of 2022, as a top Greek official tells us.

At least – and this is the positive part – the release of the funds is contingent upon the signing of contracts for the approved projects and not invoices attesting to the implementation of these projects, as is usually the case with the disbursement of EU funds.

The official added that the government will submit a preliminary proposal including projects for funding by October 15 and a final version in the first four months of the next year. The aim is to submit this final version ahead of the April 30, 2021 deadline set by the European Commission.

The same government source explains that the Recovery Fund focuses on two kinds of action: the environment and digitalization. At least 30% of the funds must go toward green actions. Thus, two ministries, Environment and Energy and Digital Governance, will be the main protagonists in this effort to use all available funds. Other ministries will have a role to play, of course, and must submit their own funding proposals, but the old emphasis on construction and infrastructure projects is not there. And planning before submitting the final proposal must be very careful, because, under the rules, it can be revised only once, by 2022.

After the initial 10% payment in 2021, disbursements will be made every six months, to help speed up implementation.