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A lot of talk of a *70bn recovery package* in the Greek media today. Let's clarify a couple of things. First about half of that (38bn) is what would have happened anyway under MFF 2021/27. Greece received about the same in the 2014/20 MFF (~36bn in constant 2018 prices) 1/
So nothing new here. The new money (over and above counterfactual) is the 32bn of the RRF to be spent in 2021/23. That's still a sizeable amount to finance the recovery, so pls no need to inflate numbers! It's about 5%-6% of GDP every year for the space of 3 years. 2/
To put in perspective, Greece's annual public and private (gross) investments amount to ~15% of GDP. Assuming the RRF will be used to finance investment projects (not current expenditures), a 5ppt boost every year for 3 years is more than welcome *if* handled well. 3/
Unfortunately part of those funds (~12.5bn) will be added onto Greece's public debt pile (currently 330bn) ...but debt servicing costs can be expected to be very low, and maturities very long. Not great but better than GR needing to those funds directly from the markets 4/
Whether those funds are sufficient to address the depth of the recession, is clearly debatable. Particularly as the national funds committed for protecting the economy are comparatively very low to this date - according to @Bruegel_org data 5/ https://www.bruegel.org/publications/datasets/covid-national-dataset/
The major debate will now shift to the use of RRF funds. This is a unique opportunity to boost green investments that are labour intensive, have strong domestic multipliers, and can steer Greece's development model towards green sectors of the future. It should be a no-brainer 6/
Conversely, directing investments towards carbon intensive sectors and infrastructure, that are facing a secular decline, would a huge mistake. After 10 yrs+ of accute crisis the last thing we need is locking our economy, businesses and workers, in sectors with no future. Ends/
