Signing of the agreement for reduced NSRF participation

The agreement between the Greek government and the European Commission to change the terms of financing projects from EU and national funds should be signed within this week. 

It provides for the reduction of Greece’s participation in financing projects with national resources, and a corresponding increase in EC participation. Thus, the percentage of national participation decreases from 15% to 5% and EC’s increased to 95%. 

This change represents a resource of about 800 million euros and its activation will start from January 1, 2012. All the above were agreed last week during a visit to Athens by the Commissioner for the Structural Funds Johannes Hahn. 

Funding is mainly for NSRF projects the implementation of which was blocked because of objective weakness of the state to contribute funds corresponding to the participation of Greece in the financing of projects. 

With the promoted changes it is estimated that the absorption of NSRF could reach a 32% rate, which might be below the target of 36%, but is a satisfactory rate of absorption nonetheless after nearly a two-year freeze on the projects. The biggest problem in the absorption of resources are the social funds, which run about 10 percentage points below the European average absorption lines, which significantly increases the risk of leaving undeveloped and even permanently losing resources of 3.5 billion euros for projects not implemented in the seven years of 2000-2006. 

The change that was agreed to increase EC participation in financing the projects, will facilitate the overall financing, but also requires a revision of the list of priorities for funding projects, which might bring a new round of clashes between ministers. The available resources remain the same and are not sufficient to fund all projects that the various ministries have integrated in their programs and they should agree which projects are a priority for funding and which should be excluded. 

Apart from the NSRF projects, the funding and implementation of large motorway concessions implemented and financed through bank borrowing remains a serious problem. Given the lack of liquidity and the changes sought by banks to securities from licensees, all major road projects have stopped. 

In this context, the government along with the EC promote the establishment of a guarantee fund that will receive 1.5 billion euros to restart bank financing. They also have to ensure that the contractors construction companies are still able to operate, as several of them are very close to an economic collapse.

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