untitled design

The review of the Recovery Fund is a headache

By Tasos Dasopoulos

A critical month for the continuation of the implementation of “Greece 2.0”, since within the next month, the Ministry of Finance will apply for the installment of 1.97 billion euros from the Recovery Fund, while it is expected to clarify the landscape with the necessary revision of the program.

After the completion of the control by Brussels of the 25 milestones, the Ministry of Finance is expected in September to make the official request for the second installment from the Recovery Fund, which corresponds to a grant of 1.97 billion euros. The money is expected – barring the unexpected – to be disbursed by the end of the year.

At the same time, of course, the procedures for the next 40 milestones are underway, which should be completed by the end of the year, so that the request for the third tranche of 3.56 billion, which in turn, is expected to be disbursed in the spring of 2023.

While the Recovery Fund program is already under pressure both in terms of obligations and in terms of timetables from next month, we will also have the acceleration of procedures for the planned review of the program which should be completed until the end of the year and should incorporate three changes that are necessary due to the situation.

The reduction of funds by 400 million euros

The first, forced change, came from the results of 2021. The rapid recovery of the economy in 2021 with growth reaching 8.3% was only negative at one point. Due to the rapid recovery of the economy, Greece exceeded the norms of the program and the available funds were reduced by 400 million euros. ¨Naturally, this necessitates re-scanning the approved projects and their budgets to adapt to the new data.

Budget changes

The second change is imposed by persistently high inflation, which is fueled by extortion of Russia by supplying natural gas to Europe. The high price levels for a period of more than a year and predicted to last until at least the beginning of 2024, force another review of a number of projects that had been tendered and included since 2021 with a specific budget, which is no longer is sufficient. The problem is mainly found in “old” infrastructure projects, part of which will also be financed by the Recovery Fund. The most convenient solution, in order not to waste more time, is a reduction of the physical object, so that projects can be completed, with the budget approved by the program.

REpowerEU

The third change concerns the integration into the Greek REpowerEU program that was announced in mid-May. For this program, the EU has 20 billion from the European Emission Rights Fund and the approximately 230 billion of unused loans from the Recovery Fund. The goal is to carry out projects that will help the fastest weaning of Europe from fossil fuels. In theory, Greece can claim additional loans amounting to 7 billion euros and 1 billion in grants. But before the projects and their budgets are finalised, the compatibility rules will have to be set by the EU.

The regulation of the program was announced to be made public by the end of July. The month passed, the regulation was not issued and now we have entered the holiday month for the Community institutions. The matter is expected to proceed in September so that the member states can complete and submit their programs.

Source: Capital

You may also like

Get the latest

Stay Informed: Get the Latest Updates and Insights

 

Most popular