The recovery plan presented by Greece aims to mobilize 57,000 million euros that will be used to rebuild the country’s industrial fabric and reform public services.
Prime Minister Kyriakos Mitsotakis has described the plan as “a bridge to the post-COVID-19 era”, which passes by boosting economic growth and creating thousands of jobs.
Athens has asked Brussels for 30.5 billion euros from the European Recovery Fund. Of which 38% will go to environmental projects and 22% to promote digital services. Banks and investors will contribute the rest of the money.
The crisis comes from afar
This is a very ambitious plan for a country that was just beginning to emerge from a decade of deep economic crisis and where austerity programs had followed one another. In addition, last year’s recession has caused a drop in gross domestic product of 8.2%, to which must be added the highest level of unemployment in the EU.
The road ahead will not be easy. “Most of the money will come from 2023. So this is medium-term aid and not immediate support,” explains Zsolt Darvas, an economist at the Bruegel institute. “But it can influence expectations. If investors trust that the Greek government will use this money wisely, it will generate economic growth. If they start investing right now, the recovery phase and the reduction of unemployment will be faster.” .
The financial assistance programs that Greece has undergone have helped pave the way. Athens had the experience to develop such a comprehensive plan in such a short time. In fact, it represents almost 20% of the country’s Gross Domestic Product.
The problem of competitiveness persists
But there is a pending problem: competitiveness. “Certainly more green and digital investment will boost the competitiveness of the Greek economy and many companies, but ultimately, competitiveness is a micro phenomenon,” says Darvas. “How are companies organized? How skilled is the workforce? How quickly are companies able to utilize the new opportunities that arise? They are determinants of competitiveness that will not change with the new plan.”
The first disbursements, around 13% of the funds, will begin to arrive at the end of this summer, as long as the plan receives the approval of the European Commission.