EU urges Greece to use aid funds to boost economy

Johannes Hahn Nov 2010 Picnik.jpg

The European Union on Friday (10 December) urged cash-strapped Greece to tap into available regional aid funds to help pull itself out of its debt crisis and return to growth.

Greece has only used 15% of a 22-billion euro budget earmarked by the EU for infrastructure and regional development projects for 2007-2013, according to its development minister.

Most of this is financed by the EU but the cash-strapped country is struggling to bring in the necessary co-financing money in the wake of budget cuts agreed in return for a 110 billion euro EU/IMF bailout.

"The structural funds can help Greece […] but let me stress that it's now your turn to actually use these funds," EU Regional Policy Commissioner Johannes Hahn told reporters.

Hahn said Greece should speed up the uptake of funding, especially cohesion monies earmarked for large investments in infrastructure and environment projects.

Development Minister Mihalis Chrysohoidis told the same news conference that Greece was aiming to bring the take-up of the EU regional funds to about 18% by the end of the year and 35% in 2011.

Greece's economy, which has been in recession since 2009, is seen shrinking by 4.2% this year and by another 3% in 2011.

In a bid to help the country return to growth, the government presented earlier this week a draft law which offers businesses tax-cuts, low-interest loans and subsidies to invest in new projects. 

(EURACTIV with Reuters.)

On 2 May, eurozone finance ministers agreed to activate a joint EU-IMF aid package worth 110 billion euros in order to help Greece deal with its crippling debt problem.

Greece also agreed new austerity measures to cut its budget deficit by 30 billion euros over three years, on top of measures already agreed. Under the EU-IMF deal, the deficit would not fall below the EU's 3% of GDP limit until 2014.

The deadline was later extended to 2015.

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