Greece reached a deal with the European Commission on Thursday that gives it access to 14 billion euros of EU funds for badly needed investment in its infrastructure. Greece has received just 4.9 billion of the 20.2 billion euros of such funds earmarked for it from 2007 to 2013 but has had to cut public works investment in order to slash its budget deficit under the terms of an EU/IMF bailout.
Under EU rules, member states must co-finance projects in order to receive EU funds, leaving debt-choked Greece struggling to fund its share. But the government said on Thursday that the EU had agreed to raise its contribution. Investment is desperately needed to boost growth. Hurt by austerity, the Greek economy contracted at an annual pace of 5.5 percent in the first quarter. The Greek government revised down its 2011 growth forecast for this year to 3.9 percent.
"The piggy bank of the National Strategic Reference Framework (NSRF) will now be at the disposal of the real economy, businesses, workers and saving the country," Greece's Development Minister Mihalis Chrysohoidis said in a statement. The Greek government said the new package would save 1.4 billion euros in state funds through 2013. This will be achieved by increasing the EU's co-financing rate for projects to 85 percent from an average 73 percent, it added. The government said the deal would allow projects worth 11 billion euros to be restarted or accelerated. This includes five major road concessions, where banks have frozen funding after the state failed to secure the land necessary, resulting in delays.
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