GIG Economic Bulletin – February 8, 2021

The European Commission gave a boost to Greece’s recovery plans by approving a private loan scheme that will leverage up to €30 billion of investments to finance the post-Covid recovery. More fiscal pain is on the way in the short term, as the government plans a revised budget to keep up with Covid support spending.

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The European Commission has approved a private loan scheme that could see the €13 bn in loans earmarked to Greece through the EU Recovery and Resilience facility transformed into €30 bn worth of investments. Meanwhile, while Fitch has maintained its rating of Greek sovereign debt at BB, the ratings agency does not expect its bonds to reach investment grade for another two years. Greece’s tourism sector could open its doors, according to government plans, as early as April.


The Finance Ministry estimates that the lockdown in Attica will add €500 million per month to the cost of government support measures, which is expected to lead to additional spending of €3 billion through to April. This is over and above the €7.5 billion already budgeted for 2021. A revised budget and public borrowing plan are expected to accommodate the additional spending needs.

Recovery Plan

The European Commission has cleared the way for EU funds to be used to finance private sector loans. The scheme, which was key to Greece’s recovery strategy, means that the €13 billion in loans from the EU Recovery & Resilience facility (RRF) could translate into €30 billion in investments co-funded by the RRF, commercial banks, and the private sector.


Economic sentiment dipped from 91.8 points in December to 90.7 points in January on the IOBE index.

The head of the GSEVEE business association has reported that 95% of the catering sector registered an average drop in business of 56.3% in 2020, while 200,000 jobs in the sector are under threat once the furlough scheme expires. A group of 300 catering businesses are planning to take legal action against the government claiming higher compensation for the closure measures.

Greek exports continued to rise during the pandemic, with the value of exported goods excluding petroleum products showing a 3.2% increase in 2020 compared to the previous year, reaching a total of over €24 billion. Exports of chemicals rose by 10.3%, industrial goods rose by 18.7%, and oil rose by 7.1%.


Ratings agency Fitch has frozen its rating of Greek sovereign debt at BB. The agency’s analysts stressed that the country’s debt is sustainable despite increased borrowing in 2020, however they predicted that its bonds would not attain investment grade for another two years because of the uncertainties brought on by the pandemic.


Bank moratoria introduced during the pandemic cover €28.4 billion shared across 405,473 outstanding loans. Banking sector analysts believe that the NPEs that are likely to arise once the moratoria expire in March are significant but manageable, with Bank of America estimating new NPEs of €5.5 billion, while the banks themselves put the figure at between €5 and €7 billion.


Greece may be in a position to open to tourism as early as April or May according to plans being assessed by the government. The strategy would rely on a combination of vaccination certificates and testing at points of entry. The 2021 budget projections include revenues of €11 billion from foreign visitors, compared to €18.2 billion in 2019 and €4.5 billion in 2020. A more pessimistic scenario of €8-€9 billion revenues would still require the industry to be functioning by June.


Six bidders, a mix of domestic and international companies, have emerged in the first stage of the tender for the lease on the various assets of state-owned mining company LARCO. LARCO’s assets are attractive due to the increased demand for nickel from battery manufacturers, however the significant environmental remediation costs and the need for safety improvements are complicating the tender.

Eldorado Gold subsidiary Hellas Gold SA will more than double the size of its investment in the Kassandra gold mines to a total $3.1 billion under a new deal agreed with Greece’s Energy Ministry. The investment will go towards expanding and upgrading the mining company’s activities, adding 1,400 new permanent jobs to the area.

Stock Market

The ASE general index closed the week up 2.02% at 764.6 points, breaking the declining trend which dominated the turn of the year.


Rising case numbers and hospitalisations have led to a tightening of lockdown measures, including a 6pm weekend curfew in Athens and a number of regions, in addition to stricter curbs on trading. Experts are warning that more restrictions are on the table if the epidemiological picture continues to deteriorate.

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