Report Contents

April 6, 2021

Europe

GREECE: Growing discontent amid virus gloom and poor handling of the reopening

BY Wolfango Piccoli

Share on twitter
Share on whatsapp
Share on facebook
Share on linkedin
Share on email
Share on reddit

Listen to our reports with a personalized podcasts through your Amazon Alexa or Apple devices audio translated into several languages

( 5 mins)
  • The government is bogged down by persistently high Covid-19 numbers, which have brought intense pressure on the country’s public health system and a slow resumption of economic activity.
  • Athens hopes that a new round of economic relief, faster vaccinations, and a soon-to-be-launched mass self-test scheme will help to improve the outlook.
  • As it starts to look beyond the pandemic, the government unveiled last week its so-called National Recovery and Resilience plan, which aims to mobilize EUR 57.5bn over a period of six years.

Over the last few days, Greece has seen record daily coronavirus cases, surpassing 4,000 on some occasions. As a result, on 5 April there were 759 intubated Covid patients in Greek hospitals – the highest this number has been since the start of the pandemic. Hospitals in Athens have reportedly run out of ICU beds to provide emergency care to sufferers.

This precarious situation has forced the center-right administration to hold back its plans for reopening various sectors of the economy. On 5 April, retail stores in many parts of Greece were allowed to open subject to several restrictions, including the requirement for customers to send an SMS to authorities giving them a three-hour window in which to complete their shopping.

However, the viral load forced officials at the last minute to call off the opening of stores in three parts of the country, including Greece’s second and third largest cities. This prompted a backlash from retail associations in the latest sign of growing frustration with the lockdown measures that have been in place almost continuously for the last five months.

Opposition parties also criticized the ruling New Democracy (ND) party, aware that opinion polls suggest dissatisfaction with the government’s handling of the pandemic has been increasing steadily over the last few months. According to a recent Metron Analysis poll for Mega TV, 51% of Greeks have a negative opinion of the administration’s performance on Covid-19. Positive views have fallen to 43% from 55% in January.

Although this has contributed to a slight erosion of ND’s overall poll lead, the conservatives still tower over the opposition. Metron Analysis puts ND on 32.3%, with left-wing opposition SYRIZA on a distant 20.5% in second place.

New aid package coming

Prime Minister Kyriakos Mitsotakis is hoping that a combination of economic relief for businesses, faster vaccinations, and a mass self-test scheme that is about to be launched will lead to the situation seeming much brighter in a few weeks. Greece had administered around 1.6 million vaccines by the end of March, leading to around 6% of the population being fully vaccinated and approximately 11% having received at least one dose. Another 55 vaccination centers are due to open this month, taking the total to 1,073 and the government aims to administer another 1.5 million jabs in April alone.

The government believes that this will lead to most of the elderly and people in vulnerable groups being protected by the time Greeks celebrate Easter on 2 May, paving the way for the country to open its doors to tourists from mid-May.

Athens is hoping to collect 50% of the tourism revenues it amassed in 2019, before Covid struck. However, these plans are largely dependent on what kind of travel is permitted this summer by a range of governments, including those in EU member states and the UK – one of the main sources of visitors to Greece. The slow adoption of the Digital Green Certificate by the EU is also a concern for Greece, which has championed the idea of facilitating travel for those who have been vaccinated.

In the meantime, the Finance Ministry is in ongoing fight to contain the economic impact of the coronavirus. It has repeatedly increased the support package, committing more than EUR 13bn so far this year, although the final figure could be closer to EUR 15bn. This is twice the amount that was initially included in the 2021 budget.

Aside from regular measures like liquidity injections via tax prepayment refunds and furlough schemes, recently the authorities announced a package worth more than EUR 300mn that aims to provide working capital so the food service sector can reopen, most likely after Orthodox Easter in early May. There is also another package, also seen exceeding EUR 300mn, being prepared for the tourism industry. Another scheme in the works envisages subsidizing fixed expenses for loss-making firms, which could provide up to EUR 500mn of liquidity to as many as 50,000 businesses.

Greece 2.0

The slower-than-expected start to the year means the Greek authorities have placed great emphasis on the resources from the Recovery and Resilience Facility to boost the economic recovery in the second half of the year and beyond.

Greece’s plan to make the most of the RRF funds, codenamed Greece 2.0, was presented last week. Athens is aiming to mobilize a combined EUR 57.5bn euros through the participation of the private sector and leverage. The EUR 18.2bn of RRF grants will be used to mobilize a total of EUR 25.65bn and the EUR 12.73bn in loans are seen as reaching an ambitious target of EUR 31.82bn.

Out of the total aspirational envelope of EUR 25.65bn from the grants, the lion’s share (EUR 10.4bn) is destined for green transition projects, while private investments and economic transformation is seen mobilizing EUR 7.8bn, followed by EUR 5.3bn in upscaling professional skills and social cohesion. Finally, EUR 2.14bn has been allocated to digital transformation. According to the authorities’ estimates, the plan will add 180,000 jobs and will boost GDP by 7% from its current trajectory up to 2026.