ECONOMY

Fund absorption lags behind

Economy and Finance Minister Giorgos Alogoskoufis warned yesterday that absorption of funds from the European Union’s Third Community Support Framework (CSFIII) must accelerate if Greece is to avoid «unwanted consequences.» The program, which funds a wide array of infrastructure projects, worth a total of 50 billion euros – including state and private sector contributions – expires in 2006, but funds will keep flowing for at least another two years, provided Greece can secure them earlier by presenting projects assessed as suitable to receive funding. Speaking at the sixth session of the CSFIII Monitoring Commission, Alogoskoufis emphasized that efficient absorption of all funds would lead to higher growth rates and more jobs. He added that, in the past, funds secured from the EU had not been used in the most productive way. The meeting was also attended by European Commission representatives, who were quite critical of Greece’s progress in absorbing CSFIII funds. The Commission officials said the present government had failed to reach the targets it had set itself in March, soon after gaining power, adding that the absorption rate since then should have been 25 to 30 percent higher. According to data provided by Deputy Economy Minister Christos Folias on Tuesday, total fund absorption had risen to 28.7 percent at the end of November from 22.1 percent in March. The Commission officials also added that Greece’s demand for 450 million euros to be exempted from the Commission’s «N+2» rule – in which funds not used two years after being approved are withdrawn – merely serves to postpone solving inherent weaknesses in the system. Folias said that the absorption rate would accelerate in 2005, adding that ministry officials are already planning ahead, for CSFIV, which will run from 2007-2013. Costas Moussouroulis, the ministry’s secretary-general for investment and growth, specified the measures taken to improve fund absorption thus far, admitting that much remained to be done, especially in providing stable timetables for projects. The Commission officials further remarked that, while construction projects are progressing fairly rapidly, there are great delays in action designed to boost competitiveness, entrepreneurship and innovation, that is, precisely the work that will be emphasized in CSFIV. Negotiations on CSFIV funding will probably be concluded next year. With 10 new members, most poorer than the older ones, clamoring for funds and larger EU countries increasingly reluctant to commit more aid, a very tough bargaining session is expected.