Banks are in a race against time to cover a shortfall of approximately 700 million euros in loan contracts from the Recovery Fund by September 15-20, when the European Commission will complete its evaluation of the sixth request submitted by the government in July. Despite the tight deadline, banks remain optimistic they can contract the remaining amount.
However, they are sweating at the thought of the next target they must reach by the evaluation of the seventh request in January, as they will need to contract new loans worth 2.5 billion euros.
Banks rushing to cover 700 million euro shortfall in Recovery Fund loans
The sixth request for disbursement of Recovery Fund resources, worth 2.1 billion euros, submitted by the government to the European Commission in July, concerned grants and was submitted following the completion of 39 new milestones and targets.
Within September, and with the completion of one more milestone, the government will submit the request for the loan component of the installment (1.8 billion euros). By mid-December, the seventh dual request must be made for a total of 3.5 billion euros, of which 1.7 billion euros in grants and 1.8 billion euros in loans. To disburse these amounts, 23 milestones for grants and 5 milestones for loans must be covered.
Banks face challenge of achieving 11 billion euros in loans
As banking sources tell “MoneyPro,” program implementation is slowing significantly, making targets difficult to achieve. The September target provided for loan contracts worth 9 billion euros.
The next milestone for submitting the seventh installment constitutes a major challenge, with bankers appearing pessimistic about whether they can cover additional loans up to the projected 11 billion euros. This is because the “reservoir” of large projects involving the state has been exhausted, and banks will need to “fish” – practically by year-end – for investment projects in a “pond” of smaller companies with projects worth 1.5-3 million euros.
The flow of Recovery Fund investment projects for financing that banks have had over the past nine months consisted of projects worth 2-2.5 million euros, mainly from the tourism sector. The absence of investment projects in manufacturing is concerning, especially when the goal is to change the Greek economy’s productive model.
Greece leads EU in Recovery Fund resources per GDP for 2023
So far, Greece ranks first among the 27 EU member states regarding Recovery and Resilience Facility resources secured compared to its 2023 GDP. These are resources of 36 billion euros, corresponding to 16.3% of 2023 GDP. At the same time, our country is also first among the 27 EU member states regarding resources disbursed as a percentage of 2023 GDP (21.3 billion euros, corresponding to 9.7% of 2023 GDP).
According to data from the Ministry of National Economy and Finance, Greece ranks 8th among the 27 member states regarding disbursements as a percentage of the total budget of the “Greece 2.0” plan (59% of its total budget) and, with the sixth request, is set to rise to 65%.
Published in MoneyPro by Parapolitika
