Absorption of EU investment subsidies remains low

Four years into the seven-year program, only a quarter of the available funds from the EU’s investment subsidies under the National Strategic Reference Framework (NSRF) program have been absorbed by Greece, a study by the country’s central bank has shown.

The Bank of Greece found that projects approved for cofinancing by Brussels under the NSRF (which runs from 2014 to 2020) up to March 2018 had a total budget of 11 billion euros, or 56.7 percent of the total 19.4 billion foreseen by the program.

In infrastructure, projects worth 3.3 billion have been approved, corresponding to 32 percent of the available funds.

However, it appears that in many cases the tending process is proceeding at a snail’s pace, a development that raises concerns about whether the funds will eventually be disbursed by Brussels.

The Bank of Greece warned that while “experience has shown that there is a sharp acceleration in the absorption of funds from the fourth year to the end of each programming period so as not to waste resources, this has not been observed in the current NSRF.”

It said that a considerable acceleration in tendering can be expected in the next two years but this will have its problems.

“In contrast to social activities, infrastructure projects are usually of a large scale, take time to complete and are likely to face implementation barriers related to land acquisition, archaeological work, local communities, land registry, funding flows, etc.”

It added that infrastructure projects often suffer from inadequate planning, inefficient management, a slow political consensus process in investment planning, and disputes between the state and concessionaires, leading to significant delivery delays and cost overruns.

“In this respect, 2018 and 2019 are crucial years for the NSRF to reverse the subdued absorption trend observed in 2017 and in the first months of 2018,” the central bank noted. Otherwise, there is a risk of losing resources.