Increase in public investment by 900m euros announced by Hatzidakis and Papathanasis

The increase in the Public Investment Programme ( ) for 2024 by 900m euros was announced today (16.9.2024) by Finance Minister Kostis Hatzidakis and Deputy Minister Nikos Papathanasis in the context of the press conference given by the Ministers responsible for specialising the announcements of Prime Minister Kyriakos Mitsotakis at ITH in relation to the development and strengthening of the resilience of the economy. With this increase, the total budget of the PPS is €13.1 billion, €12.2 billion and the additional funds as noted by Mr. Hatzidakis come from two sources: Firstly, the development of the economy which allows the increase in public revenue without an increase in taxes. And secondly, the treatment of tax evasion with 11 different initiatives that are ongoing and yield specific revenue that is allocated either to strengthening the income of vulnerable citizens, with the actions announced last week, or to strengthening the IPA. “The country, stressed Mr. Hatzidakis, must send a strong development message. We do not want unfinished business in public investment and we pay particular attention to promoting the country’s development process.” A supplementary budget will be submitted to the House for the implementation of the increase in the PPS. As part of the interview Mr. Hatzidakis and Mr. Papathanasis presented in detail the Ministry’s initiatives of competence to be implemented in the next period. In particular, Minister of National Economy and Finance Kostis Hatzidakis presented four actions for Modern and Crisis-resistant economy including: A. Healthy banking system serving the economy The aim is to strengthen the liquidity of enterprises and households with competition between banks. In this context: The application for an extension of the Hercules programme was submitted to the European Commission by an additional EUR 1 billion. “We expect the EU’s positive response. With the implementation of the programme, the red loans of systemic banks will fall to the EU average. It is another positive step for the banking system, we want a banking system competitive, competitive and above all healthy,” stressed Mr. He recalled that with the contribution of “Herakles” unperforming loans, it has decreased from around 40% in July 2019 to 7.5% in March 2024 and total to banks and services have been limited from 92 billion euros in 2019 to 69 billion euros in 2023. The next phase of the National Bank’s divestment goes ahead while the investment in Eurobank (1.4%), Alpha (8.98%), National (22%) and Piraeus (27%). The merger of Bank of Attica and Pagretia is completed, leading to the fifth banking pillar and strengthening competition at the level of deposits, loans and supplies, with obvious benefits for depositors and borrowers. B. Motivations for investments in innovation as well as acquisitions – mergers ” Promoted, as Mr. Hatzidakis stressed, the most competitive framework of tax incentives in the EU for research costs, created Startup Visa and introduced two new incentives for business mergers. The aim of the interventions is to encourage undertakings to take risks for investment in research, to strengthen the interconnection of businesses with the academic community and the startup ecosystem and to direct more foreign investment in productive activities.” Through the new initiative for Startup Visa a residence permit will be granted (according to the Golden visa standard) for an investment of 250,000 euros in a startup company registered on the National Register of New Enterprises (Elevate Greece), subject to the creation of 2 jobs within the first year. The granting of a residence permit for a capital injection of at least EUR 400,000 already applies to companies based in Greece. “We do not incriminate investment in real estate, but investments are not only in real estate. It is certainly also in the productive economy,” the minister stressed. For acquisitions – mergers and innovation, in addition to the tax incentives established, additional financial incentives are created. In particular, the NSRF action of approximately 350 million to finance 50% of the investment costs of small and medium-sized enterprises, which are to be announced soon, will provide for a further grant (+10%) for investments by companies which are the result of a merger. It is also created by the end of the year Patent Fund by the Greek Development Fund. The Bank will finance the acquisition of an international patent and the development of a sustainable product (Minimum Viable Product) based on this patent. C. Promotion of the establishment of a National Investment Fund The creation of the new fund is provided for in the Law on the Restructuring of the Trans-Fund recently passed. It is a new investment tool, similar to those operating in most countries of the European Union that will invest in critical sectors (indicative: green transition, circular and blue economy – strategic infrastructure and networks – transport – technology) that are not adequately covered by existing funds but have added value for the economy. The Fund will also be able to operate as a co-investor with other funds, notably minority holdings. The initial investment capital is EUR 300 million. The Superfund has hired Blackrock which will recommend to the Treasury by the end of the month for the most appropriate corporate structure and organization of the new Investment Fund. “We want, stressed Mr. Hatzidakis, to send a message that the country is changing at this level.” D. Protection against natural disasters The aim of the initiatives is to strengthen the resilience of both households and businesses and the state budget towards the effects of natural disasters which in recent years have been more frequent and more intensive than the past. Following good practices in other European countries, the following interventions are adopted: It is doubled from 10 to 20 % the discount of the ENFI for housing up to 500,000 euros insured against natural disasters. Larger-valued dwellings will continue to have a 10 % discount on the EFSI and will have to be insured for natural disasters, otherwise they will not be compensated by the State. From 1.6.2025 all enterprises with a turnover of more than EUR 500,000 will have to be insured for natural disasters. The measure is currently in force at a limit of 2 million ECU and concerns 17,000 legal persons (5% of all companies) with 87% of the gross revenue of all the companies in the country. By reducing the turnover limit to EUR 500,000, the measure extends to 51,000 legal persons ( 15% of the total) who have 95% of the gross income of all the country companies. From 1.1.2025 and with the renewal or conclusion of a new insurance policy all vehicles of private and professional use are also required to be insured for natural disasters (the cost is estimated at EUR 7 to 13 per year). Moreover, Mr Papathanasis stressed that Greece is in the 4th position of absorption of the resources of the NSRF 2021-2027, and in the 6th place regarding the absorption of resources of the Recovery and Durability Fund, with 47.9%, at the time when the EU average is 33.8%. He estimated that this position would improve as dozens of projects financed by European resources are under way throughout the territory, while the payment of the 4th request, amounting to EUR 1 billion for grants, recently approved by the EU, will be counted, bringing the rate to 50.5%. “The fulfilment of the ossomers is identified with reforms,” noted Mr Papathanasis, who also responded to the complaints brought by the Recovery Fund, the NSRF and all the financial and investment instruments available to the country, not to support small and medium-sized entrepreneurship. The whole NSRF is directed to the IMMEs and, under the TPA, they have already joined subsidy programmes, 347 000 small and medium-sized enterprises. At the same time, of the 844 investment projects submitted to the loan side, 515, i.e. 61%, come from small and medium-sized enterprises. Similar is the real picture regarding the strengthening of entrepreneurship by the Fair Development Transition Programme, the first relevant programme in the EU, of EUR 1.6 billion, in which 4,000 new jobs are expected to be created. The Greek Development Bank plays an important role in the strengthening of SMEs and in the expansion of its lending perimeter by banking institutions, with the total budget of the loans it grants, amounting to €3.9 billion. Only under the new Entrepreneurship Fund III, loans exceed 2.2 billion euros. 84% of the loans from the TEPIX III Loan Fund are granted to enterprises with less than 50 employees, and 81% to enterprises with a turnover of less than EUR 10 million. At a time when 90.1% of the TEPIX III Guarantee Fund loans are also granted to companies with less than 50 employees and 91.5% to enterprises with a turnover below EUR 10 million. At the same time, 60% of loans relate to operations in the Region. In the same direction, the new Fair Development Transition Portfolio Fund, implemented by EBA, in which loans of EUR 187 million are expected to be granted, with recipients of very small and newly created enterprises, as well as female entrepreneurship. Deputy Minister Nikos Papathanasis stressed: “The development in the country, reflected in all official European and international indicators, and brings Greece to 2nd place in the EU, failed, succeeded. The 500 thousand new jobs created since 2019, the investment of companies that are world champions, but also the financial space, which in turn leads to further support for society and the everyday life of citizens, are a product of the systematic and effective work of the governments of Kyriakos Mitsotakis. We continue in the same direction, so that not a single euro is lost, with the main tool of the Public Investment Programme, which, despite the fact that it is already EUR 12.2 billion – a record budget for the last 14 years – we are further increasing, by EUR 900 million for 2024, with the annual increase forecasting 10%-17% for the two years 2024-2026.”