EU Crisis Funding Could ‘Change the Course’ of Greece, Government Says

(Bloomberg) — Greece’s government sees the European Union’s Next Generation plan to fund economic recovery as a game-changer for a country being slammed by the pandemic while scrambling to emerge from a decade-long debt crisis.

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Open and closed businesses on an empty street during lockdown in Athens, Greece, on Monday, Nov. 9, 2020. Greece entered a new three-week long national lockdown on Saturday after a prolonged rise in coronavirus infections and an increase in the number of patients in intensive care.

“The amounts are so large that with correct use they can change the course of the country,” Alternate Finance Minister Theodoros Skylakakis said at a virtual event to present Greece’s plan for using European funds.

Greece wants to use the funds to invest in green and digital initiatives, boost employment and job skills, foster social cohesion, and encourage private investment.

Athens’s main goal will be “to cover the large investment, output and employment gap endemic to the performance of the Greek economy over the last decade which deteriorated due to the current pandemic,” according to the plan.

The country is set to get 32 billion euros ($38 billion) in EU funding, 19.4 billion euros of which will be grants. Some 38% of the grants will be directed to green projects including the interconnection of Greek islands, a massive program to boost energy efficiency for residential, commercial and public-sector buildings and infrastructure development for electric vehicles.

The government of Prime Minister Kyriakos Mitsotakis forecasts that economic output will drop by 10.5% in 2020 due to the pandemic, worse than an October estimate for a contraction of 8.2%. That adds to a cumulative fall in gross domestic product of around 25% during the country’s debt crisis. While Greece forecasts its unemployment rate will fall to 17.9% in 2021 from 18.9% this year, it’s still the highest in the EU.

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©2020 Bloomberg L.P.

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