Greek plan a hard sell to EU
The utilization of the loans Greece will receive via the Next Generation EU fund, amounting to 12.7 billion euros, for the financing of private investments is proving one of the hardest fields of negotiation for the approval of the Greek recovery plan, as talks are ongoing.
The Greek plan generally received positive feedback, as it was among the most detailed the European Commission had received. However, the proposals for the use of the EU loans for private investments constitute a Greek “innovation” that will take a great effort to pass the test of European bureaucracy, according to sources.
In a video conference on Thursday, EU officials proposed that the government passes the loans on to private enterprises, but only via European lenders such as the European Investment Bank, the European Bank for Reconstruction and Development or the Invest EU project (also known as the Juncker Plan), and not via Greek banks, as Athens is proposing.
The government proposal provides for investments to be approved if the enterprises concerned have secured at least 50% of the necessary capital through bank credit, thereby ensuring their essential evaluation by the bank system.
The EU officials also raised the issue of collateral supply by the Greek state and argued that funding ought to take place through leveraging, so as to have smaller loans issued that would have a multiplying effect on investments.
The Greek negotiating team does not agree with the supply of collateral, as it often ends up burdening the state, with enterprises failing to repay the guaranteed loan.
The Greek side also considers it particularly important that it will be the one to set the criteria for credit to businesses, so as to serve the objective of exports and the change of the country’s production model that the government is aiming for.
The negotiations will continue and Athens is hoping to see its proposal go through, one way or another. One negotiating team member argues that the Greek proposal is based on strong arguments that will be hard to reject, such as the large investment gap from the debt crisis.
