Prior actions, but not as we knew them

The first tranche of resources from the Next Generation EU fund, about 4 billion euros, will be the only one to be disbursed without any prerequisites, as soon as the Greek plan is approved, possibly in July.

After that, Greece will enter a period of milestones and targets – i.e. pre-agreed commitments the country must meet in order to have each installment of resources disbursed by the program’s completion in 2026.

At first glance, this system appears reminiscent of the bailout program, in the sense that some prior actions are required to get a tranche. In practice, this will be totally different: While in the 2010s Greece had to realize milestones that the creditors had imposed and were typically unpopular, such as tax hikes and pension cuts, to receive the loan tranches anticipated, this time the prior actions will in most cases constitute reforms, the voting of legislation or reaching a certain stage in the realization of a co-funded project; the target will count the final outcome of a project or program, such as how many people have received training etc. In other words, the targets and milestones will be positive objectives.

Furthermore, the tranche to come after meeting those requirements will mostly constitute a grant and not a loan.

The milestones agreed, as Kathimerini understands, will provide for instance that at the start of next year the online interconnection of tills and card terminals (PoS) with the tax mechanism will have been put into law; by end-2022 one-third of contracts for town planning must have been conceded; by the second quarter of 2023 power cable connection contracts for islands such as Serifos must have been signed, etc.

Last Thursday all member-states completed the approval of the decision about the use of own resources, paving the way for the Commission to borrow from the markets within June. If everything proceeds as planned, the first disbursements could take place at end-July, and Greece will likely be among the first few countries to benefit.

Up until Thursday, 19 EU member-states had submitted their recovery plans and the Commission announced it will continue to work hard with the other members to help them submit their own blueprints.