News Analysis: EU recovery fund a game changer for Greek economy

2021-07-13 22:05:38 GMT2021-07-14 06:05:38(Beijing Time) Xinhua English

ATHENS, July 13 (Xinhua) -- While the European Union's Recovery and Resilience Facility (RRF) is a game changer for the Greek economy in the post-pandemic era, officials and experts from home and abroad believe that Greece needs to stick to the path of implementing critical reforms and supporting investments to achieve sustainable growth and succeed.

"Good news for Greece! With 30.5 billion euros (36 billion U.S. dollars), the NextGenerationEU recovery plan can help Greece become greener, more digital and better prepared for the future," European Commission President Ursula von der Leyen tweeted on Tuesday after the approval of the Greek plan "Greece 2.0" during a meeting of EU finance ministers in Brussels, along with 11 other national plans.

Greece will get some 17.8 billion euros in grants and 12.7 billion euros in loans over the next five years, with the first tranche scheduled to be disbursed by August, said European Commission Executive Vice-President Valdis Dombrovskis on Tuesday.

The Greek plan foresees over 106 investments in clean energy, digital transformation, education and social services and 68 reforms aiming to further boost competitiveness, exports and improve the business environment.

Calling it a historic moment for the country, Greek Prime Minister Kyriakos Mitsotakis said: "Now the hard work begins as we accelerate our plans creating jobs and growth in the sustainable, digital and infrastructure space, leading to a brighter future for all our citizens."

Addressing a forum in Athens a few days ago, Mitsotakis reiterated his optimism about the prospects of the Greek economy, citing the RRF as a basic reason.

For the long term, the EU recovery fund will contribute 7 percent to the Greek GDP, according to the prime minister. During the pandemic, structural reforms which have made Greece a desirable destination for investments, continued and this is confirmed by international rating agencies' recent upgrades of Greek sovereign credit rating, he added.

Addressing the same forum, Klaus Regling, managing director of the European Stability Mechanism (ESM), said that achieving growth rates of 3.5 percent this year and 6 percent in 2022 are goals within reach for Greece, according to the ESM's base scenario. But he warned that risks remained as a new variant of COVID-19 could have a negative impact on tourism, a vital pillar of Greek economy.


In any case Greece should stay committed to promote reforms, stay on the path of fiscal discipline and continue with its efforts to boost growth by utilizing the RRF's funding to finance reforms and investments, he said.

"The Recovery and Resilience Fund is a real game changer, both in terms of volume and the focus on critical areas for the recovery of the Greek economy, such as green investments, innovation and digitalization," Andreas Yannopoulos, founder of the InvestGR Forum, a platform bringing together in recent years officials, company executives and academics, to discuss proposals about making Greece an attractive investment destination, told Xinhua.

"But the key words remain reforms and investments, if we want 'Greece 2.0' to succeed in transforming the economy. The wild card, naturally, is the future course of the pandemic, but so far cautious optimism seems justified," Yannopoulos said.

Although foreign direct investment (FDI) contracted in 2020 around the world, investor interest in Greece showed remarkable resilience, with 3.1 billion euros in 2020 invested last year and impressive increase recorded in specific sectors, InvestGR noted.

For example, FDI tripled in pharmaceutical production and the hospitality sector compared to 2019, according to data from the Bank of Greece (BoG), the central bank.

Welcoming the RRF as a great opportunity for the Greek economy, BoG Governor Yannis Stournaras also stressed the necessity of implementing critical reforms to absorb all the funds allocated.

"It is up to us to absorb the funds in the best way possible in order to accelerate the recovery of the economy," he said in a recent interview with local financial news website Business Daily.

"The RFF is a unique opportunity for Greece to return to prosperity. The question is whether we will seize it or waste it, like we have done in the past. Because the utilization of funds requires unprecedented conditions for Greek standards. It requires an organized public sector as well as very fast procedures for the assignment and monitoring of commitments," Nikos Christodoulou, Consulting Leading Partner at Deloitte Greece, commented in an article in local financial news website (1 euro = 1.18 U.S. dollars) Enditem