Greek cabinet clears EU-funded recovery plan, eyeing big boost in growth

ATHENS: Greece's cabinet on Monday approved a national recovery plan that it hopes will boost economic growth by as much as seven percentage points over the next six years and create tens of thousands of jobs.

Under the multi-billion euro coronavirus recovery package agreed by European Union leaders last year, Athens is to get 19.4 billion euros in grants and 12.7 billion euros in cheap loans over the coming years, equal to about 16% of its gross domestic product.

"The national recovery plan may add up to seven percentage points to GDP on a six-year horizon, on top of the natural growth rate of Greece's economy, and add 200,000 jobs," said Prime Minister Kyriakos Mitsotakis, calling the plan "a bridge to the post-COVID-19 era".

Under last year's EU agreement, the European Commission will be allowed to raise up to 750 billion euros on capital markets and pass on the money to member states worst hit by the pandemic through payments linked to jointly agreed reform and investment plans, partly as grants and partly as loans.

The Commission expects the first tranches of the package to be paid out in the summer.

The Greek plan will now be debated in parliament before being submitted in its final form to Brussels, ahead of an end-April deadline.

A MORE COMPETITIVE ECONOMY

Mitsotakis told ministers the recovery plan could mobilise nearly 60 billion euros ($70.66 billion), adding leverage from the private sector via equity capital and loans.

The plan's four main pillars comprise projects on green energy, digitalisation, boosting employment and investment and reforms to upgrade education and health, Mitsotakis said.

"It is a unique opportunity to radically change the Greek economy's model and lead it towards a more outward-looking, competitive one with a more efficient and digitalised state and a tax system friendly to growth," he said.

More than one third of the plan's funds will be allocated to the economy's green transition, renewable energy, electric public transport and protecting biodiversity.

"This leap will be just the start, the first kilometre of a marathon that will end when all the funding is absorbed by 2026 at the latest," Mitsotakis said.