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‘Greece 2.0’: The Plan for Greek Economic Recovery Explained

Greek Recovery Plan
The facade of the Greek Parliament in the evening. Credit: LBM1948/Wikimedia Commons/ CC BY-SA 4.0

Greece 2.0’, the Greek Economic Recovery Plan for the post-COVID-19 reality, has been laid out with the European Investment Bank (EIB) agreeing to manage a total of 5 billion euros ($5.95 billion).

Athens is to receive approximately 30 billion euros from the European Union’s 750-billion-euro Recovery and Resilience Facility (RRF) and expects another 27 billion euros from inexpensive loans and investors over the next six years.

The EU Recovery and Resilience Fund is meant to help repair the economic and social damage caused by the coronavirus pandemic, and lay the foundations for a modern and more sustainable Europe.

The EU’s long-term budget, coupled with NextGenerationEU, the temporary instrument designed to boost the recovery, will be the largest stimulus package ever financed through the European Union.

On December 17, 2020 it was decided that a total of €1.8 trillion will be used to help rebuild a post-COVID-19 Europe. Part of the package calls for creating a greener, more digital and more resilient Europe as well.

Greece’s National Recovery and Sustainability Plan

According to the government, the primary goal of the Greek Recovery Plan is to fill the large gap in investment, national product and employment — an endemic gap in the performance of the Greek economy over the last decade — which has worsened due to the COVID-19 pandemic.

In this context, the National Recovery and Sustainability Plan aims to mobilize significant forces from the private sector, boosting private investment and using Public-Private Partnerships and Energy Service Companies to make significant public investment efforts.

For the implementation of the Greek Recovery Plan, the government requests all the resources it can receive under the Recovery and Resilience Fund. That will amount to 17.8 billion euros in subsidies and 12.7 billion euros in loans.

Using these funds and utilizing the loans of the Recovery Fund to promote private investment, “Greece 2.0” seeks to mobilize total investment resources of 57 billion euros.

The Greek Recovery Plan consists of four pillars: Green, Digital, Social, and Economic and Institutional reform.

1. Green transition. The investments of the Greek Recovery Plan include, inter alia:

– Extensive program “save” for households, businesses, public buildings and infrastructure.

– The interconnection of Greek islands, which will significantly reduce the energy costs of households and businesses and energy storage investments that will allow the best utilization of the country’s potential in Renewable Energy Sources.

– Promotion of strategic urban actions for development of their environmental value.

– Large investments in flood control projects, accompanied by changes in the use of irrigation networks and installation of telemeters for leak detection and smart water management.

– A new National Reforestation Plan.

– Initiatives to protect biodiversity.

– Large investments in infrastructure and equipment of the Civil Protection authority.

– Investments for the elaboration of urban plans that will inform validly and immediately regarding land use for 4/5 of the country.

2. Digital transition. The investments of the Plan include, inter alia:

– Pre-installation of fiber optic infrastructure in buildings to facilitate the transition to the use of fiber optic networks by businesses and households.

– Development of 5G network corridors on Greek highways.

– Connection of the mainland with modern underwater fiber optic cables with the Greek islands.

– Digitization of key files in various sectors (health, justice, town planning, land registry, immigration, etc.) and their integration into respective information systems.

– Ensuring the interconnection and interoperability of systems and individual registers and individual applications between public bodies.

– Information system for the management of transactions of the Public Administration with the citizens and businesses.

– Investments to battle tax evasion, which include further digitization of tax services, codification and modernization of tax legislation, actions against smuggling and the use of artificial intelligence to facilitate tax audits, enhance electronic transactions, etc.

– Digital transformation of companies, with the acquisition of equipment, cloud services and internet services, such as new electronic payment technologies, electronic invoicing, remote work, digital office, etc.

3. Private investment and economic reform. The Plan includes, inter alia:

– Strong incentives for private investment (green, digital transformation, innovation, extroversion).

– Important infrastructure projects such as the northern part of the E65, the Northern Road Axis of Crete, a major road safety project, major irrigation projects through PPPs, the modernization also through PPPs of the railway network, a new suburban railway in Western Attica, tolls, “smart” infrastructure, etc.

– Investments for the strengthening of culture, such as the creation of the Museum of Underwater Antiquities in Piraeus, development of cultural and natural routes and a program for the protection of emblematic monuments from climate change, etc.

– Investment in tourism with interventions for mountain tourism, health tourism and the use of thermal springs, gastronomy, upgrading of tourist ports, diving tourism, access to beaches and special training programs to upgrade the skills of the human resources of tourism business.

4. Social cohesion and employment. The plan includes, inter alia:

– Employment programs aimed at increasing employment with particular emphasis on the development of digital skills and digital transformation of education.

– Development of digital infrastructure in the classroom and interactive learning.

– Upgraded equipment in the laboratories and research centers.

– Vouchers for purchasing computers and tablets to vulnerable households so children can familiarize themselves with digital tools.

 PM Mitsotakis: 200,000 jobs and 7.0 percent GDP increase

In presenting the National Development Plan before Parliament on March 30, Prime Minister Kyriakos Mitsotakis presented the key principles of the Greek Recovery Plan.

Dubbed “Greece 2.0.,” the plan aspires to not only create 200,000 jobs but also to increase GDP by 7.0 points in the next six years.

The recovery plan, which was approved by the cabinet Monday, will be debated in Parliament and is expected to be submitted to the European Commission in mid-April.

Mitsotakis said that the Greek recovery plan, which contains 170 projects, can be described as “a bridge to the post-COVID-19 era.”

“The recovery plan has a groundbreaking character, because it changes the model to create an open economy and a tax system that is friendly to growth and always focused on the future,” the Prime Minister said.

He stressed that its directions were drawn up by Greeks and for Greeks, and that the Greek government therefore has “full ownership” of the plan.

“It incorporates our experience from the pandemic. It eliminates long-standing problems. Greece’s Plan leads to a fair redistribution of national wealth. The effort that begins today means more jobs, especially for our young people, and a better daily life for everyone,” the Prime Minister added.

EIB to help manage Greek Recovery Plan

The European Investment Bank has agreed to help manage up to 5 billion euros ($5.95 billion) as part of Greece’s implementation of the National Recovery and Resilience Plan.

EIB technical, financial and environmental experts will identify high-impact projects, priority sectors and effective financial structures to ensure best use of new European grant and loan support for Greece to mitigate the social and economic impact of the coronavirus pandemic.

Finance Minister Christos Staikouras said that “Greece 2.0” is “realistically ambitious, modern, innovative and extroverted… underpinned by structural reforms, efficient public investment and important private sector participation.”

“The agreement will ensure that recovery from the challenges of COVID-19 also delivers climate action, harnesses digital opportunities and accelerates the energy transition,” said Christian Kettel Thomsen, the EIB Vice President who is in charge of lending operations in Greece.

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