by Jean Pisani-Ferry, Benedicta Marzinotto and Guntram B. Wolff
July 27, 2011
European leaders have called for a comprehensive strategy for growth and investment in Greece and a task force will be appointed to set out the details of how European Union structural funds could be used to that end. We had floated such ideas in February. Here is what the EU should do.
Substantial funds are available. We calculate Greece still has more than €12bn in unused structural funds, which could be used to leverage loans from the European Investment Bank, increasing the potential funds available over the next two to three years to €16bn. This would not involve any additional transfer to Greece beyond that already allocated to Athens in the EU budget.
However, governance must be reformed. EU structural funds are earmarked for regional development and subject to long procedures, not least because of political give-and-take. Spending priorities have little to do with current urgencies. The EU should pass emergency legislation reallocating the money to an Economic Revival Fund for the duration of the International Monetary Fund/EU assistance programme. The fund’s spending priorities should match the economic objectives of the programme, with a focus on growth and competitiveness, and faster disbursement procedures.