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Greece begins a new chapter following the conclusion of its stability support programme

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Greece has successfully concluded a three year European Stability Mechanism (ESM) stability support programme with its place at the heart of the euro area and European Union secured.

The successful conclusion of the programme is a testament to the efforts of the Greek people, the country’s commitment to reform, and the solidarity of its European partners.

European Commission President Jean-Claude Juncker said: “The conclusion of the stability support programme marks an important moment for Greece and Europe. While their European partners have demonstrated their solidarity, the Greek people have responded to every challenge with a characteristic courage and determination. I have always fought for Greece to remain at the heart of Europe. As the Greek people begin a new chapter in their storied history, they will always find in me an ally, a partner and a friend.”

Pierre Moscovici, Commissioner for Economic and Financial Affairs, Taxation and Customs, said: “The conclusion of the stability support programme is good news for both Greece and the euro area. For Greece and its people, it marks the beginning of a new chapter after eight particularly difficult years. For the euro area, it draws a symbolic line under an existential crisis. The extensive reforms Greece has carried out have laid the ground for a sustainable recovery: this must be nurtured and maintained to enable the Greek people to reap the benefits of their efforts and sacrifices. Europe will continue to stand by Greece’s side.”

A total of €61.9 billion in loans have been provided to Greece under this stability support programme on the basis of implementation of a comprehensive and unprecedented reform package. This stability support programme took a coordinated approach to tackle long-standing and deep-rooted structural issues that contributed to Greece experiencing an economic crisis.

Greece has taken measures to ensure its fiscal sustainability, bringing the general government balance from a significant deficit to surplus in 2017, which is projected to be maintained. These reform measures and consolidation efforts will have cumulative effects over time, and will thus continue to positively impact fiscal sustainability well beyond the conclusion of the programme.

The financial sector is now in a much stronger position as a result of successful recapitalisation operations, an overhaul of bank governance, and work to implement a strategy to reduce non-performing loans, which must be sustained.

The efficiency and efficacy of the public administration has been improved including through the introduction of new rules on the appointment, assessment and mobility of public sector employees; the establishment of the Independent Authority for Public Revenue; and measures to make the judicial system more efficient.

Finally, important structural measures have been put in place to improve Greece’s business environment and competitiveness to make Greece an attractive destination for investment and allow businesses already in place to expand, innovate and create jobs; as well as to establish sustainable and universal pensions, health care and social benefit systems, including a guaranteed minimum income scheme.

When taken together, these transformative reforms have laid the foundations for a sustainable recovery, putting in place the fundamental conditions needed for sustained growth, job creation and sound public finances in the years to come.

Improving economic indicators confirm that while work remains to be done, the efforts undertaken are already delivering tangible benefits by restoring order to public finances, reducing unemployment, and securing a return to growth. Economic growth has rebounded from -5.5% in 2010 to 1.4% in 2017 and is expected to remain around 2% in 2018 and 2019. The fiscal balance has progressed from a massive deficit of 15.1% in 2009 to a 0.8% surplus in 2017 (corresponding to a primary surplus of 4.2% in programme terms). Although unemployment remains unacceptably high, according to figures recently released by the Hellenic Statistical Authority, unemployment fell to 19.5% in May 2018, reaching a level below 20% for the first time since September 2011.

The conclusion of the programme marks the end of one chapter and the beginning of another for Greece. It will be necessary to remain focused on fully addressing the social and economic consequences that are the legacy of the crisis years. This will require that the Greek authorities maintain ownership of reforms and ensure their sustained implementation, as per their commitments at the Eurogroup meeting of 22 June 2018. This is crucial to ingraining market confidence and strengthening Greece’s economic recovery, particularly in the immediate post-programme period.

Greece will be fully integrated into the European Semester of economic and social policy coordination to help ensure that the country and its people reap the full benefits of the efforts undertaken in recent years. In the post-programme period, the completion, delivery and continued implementation of reforms agreed under the programme will also be monitored through an enhanced surveillance framework.

The Commission’s Structural Reform Support Service will continue to assist the Greek authorities, upon their request, in the design and implementation of growth-enhancing reforms.

Background

Greece has benefitted from financial assistance from its European partners since 2010. The Greek authorities requested a new ESM stability support programme on 8 July 2015. The European Commission signed, on behalf of the ESM, a Memorandum of Understanding for a three year stability support programme on 20 August 2015.

On 23 June 2018, the Eurogroup confirmed that all of the prior actions under the fourth and final review of the stability support programme had been completed. The Eurogroup also reached an agreement on a strong package of debt measures, in addition to the short-term measures already in place, to ensure that Greece’s debt is sustainable in the longer run. On 6 August 2018, the ESM approved a final disbursement of €15 billion of financial assistance.

In total, €288.7 billion in loans have been provided to Greece since 2010. This includes €256.6 billion from its European partners and €32.1 billion from the International Monetary Fund (IMF).

In parallel to the stability support programme, the Commission launched the plan for a “New Start for Jobs and Growth in Greece” in July 2015 to facilitate Greece maximising its use of EU funds to stabilise its economy and boost jobs, growth and investment. As a result of the exceptional measures adopted under the plan, Greece is now among the top absorbers of EU funds. For the period 2014-2020, Greece has already received almost €16 billion from a large pool of EU funds. This is equivalent to over 9% of the 2017 annual gross domestic product of Greece.

Greece is also the top beneficiary of the Juncker Plan’s European Fund for Strategic Investments (EFSI), relative to GDP. The EFSI is now set to trigger well over €10 billion in investments and support more than 20,000 small and medium-sized businesses in Greece.

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Nearly half of City GDP at Risk of Disruption from Nature Loss

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Cities contribute 80% to global GDP – but they also account for 75% of global greenhouse gas emissions. Integrating nature-positive solutions can help protect cities from growing risks associated with extreme weather while driving sustainable economic growth.

In collaboration with the Alexander von Humboldt Institute and Government of Colombia, the World Economic Forum’s BiodiverCities by 2030 Initiative published a report addressing the urgency of cities’ untenable relationship with nature. The Initiative’s goal is to reverse this existential global threat and move forward with a plan that will result in cities and nature co-existing in harmony by the end of the decade.

The report is a call for multistakeholder action to integrate nature as infrastructure into the built environment. In making the economic case for BiodiverCities, Nature-based Solutions (NbS) for infrastructure and land-sparing are found to be cost-effective ways for cities to innovate and meet current challenges. Spending $583 billion on NbS for infrastructure and on interventions that release land to nature could create more than 59 million jobs by 2030, including 21 million livelihood-enhancing jobs dedicated to restoring and protecting natural ecosystems.

“In the conventional paradigm, urban development and environmental health are like oil and water,” said Akanksha Khatri, Head of Nature and Biodiversity, World Economic Forum. “This report shows that this does not have to be the case. Nature can be the backbone of urban development. By recognizing cities as living systems, we can support conditions for the health of people, planet and economy in urban areas.”

The report finds that by incentivizing investments in natural capital, cities can unlock the benefits of nature. Nature-based Solutions are on average 50% more cost-effective than man-made alternatives and deliver 28% more added value. This capitalization, in turn, instils and nurtures nature-positive values and fosters bio-inspired innovations that will ultimately optimize economic competitiveness and prosperity.

“As cities think about building for the post-pandemic future, they have a priority to provide their citizens with a more equitable and prosperous quality of life by protecting their natural resources,” said Mauricio Rodas, Co-Chair of the Global Commission on BiodiverCities by 2030 and former mayor of Quito, Ecuador. “In this report, we offer actionable solutions to heal the relationship between cities and nature. We need all stakeholders to invest in urban nature.”

“Cities don’t need to be concrete jungles in conflict with nature in and outside their boundaries,” said Jo da Silva, Arup Global Sustainable Development Leader. “They should be places where all people and nature co-exist and thrive together. Nature-based solutions offer wider benefits than traditional engineered ‘grey’ solutions – such as improving resilience, increasing citizens health and wellbeing and moving cities to net zero. Using powerful new digital mapping tools to help us understand cities as complex systems, we are increasingly adopting nature-based solutions in our projects – this needs to be accelerated on a global scale.”

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Labour market recovery still ‘slow and uncertain’

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As the COVID-19 pandemic grinds on and global labour markets continue to struggle, the latest International Labour Organization (ILO) report, published on Monday, warns that recovery will remain slow.

In its flagship World Employment and Social Outlook Trends 2022 (WESO Trends), ILO has downgraded its 2022 labour market recovery forecast, projecting a continuing major deficit in the number of working hours compared to the pre-pandemic era.

“Two years into this crisis, the outlook remains fragile and the path to recovery is slow and uncertain”, said ILO Director-General Guy Ryder.

Disheartening outlook

Last May’s previous full-year estimate, forecasted a deficit equivalent to 26 million full-time jobs.

While this latest projection is an improvement on the 2021 situation, it remains almost two per cent below the number of pre-pandemic hours worked globally, the report pointed out.

Moreover, global unemployment is expected to remain above pre-COVID levels until at least 2023.

The 2022 level for those without jobs, is estimated at 207 million, compared to 186 million in 2019.

“Many workers are being required to shift to new types of work – for example in response to the prolonged slump in international travel and tourism”, added the ILO chief.

‘Potentially lasting damage’

WESO Trends also warns that the overall impact on employment is significantly greater than represented in the raw figures, as many people have left the labour force.

The participation rate of the 2022 global labour force is projected to remain 1.2 percentage points below that of 2019.

The downgrade reflects the impact of COVID variants, such as Delta and Omicron, as well as the ongoing uncertainty surrounding the pandemic’s future course.

“We are already seeing potentially lasting damage to labour markets, along with concerning increases in poverty and inequality”, said Mr. Ryder.  

Starkly different impacts

The report warns of stark differences in the impact that the crisis is having across groups of workers and countries – deepening inequalities within and among nations – while weakening the economic, financial and social fabric of almost every State, regardless of development status.

The damage is likely to require years to repair, with potential long-term consequences for labour forces, household incomes, and social and possibly political cohesion.

While effects are being felt in labour markets globally, ILO observes a great divergence in recovery patterns, which seem to correlate with the containment of the coronavirus.

Regional differences

The European and the North American regions are showing the most encouraging signs of recovery, while southeast Asia, and Latin America and the Caribbean, have the most negative outlook.

At the national level, labour market recovery is strongest in high-income countries, while lower middle-income economies are faring worst.

And the disproportionate impact of the crisis on women’s employment is expected to last in the coming years, according to the report.

At the same time, WESO Trends flags that the closing of education and training institutions “will have cascading long-term implications” for young people, particularly those without internet access.

There can be no real recovery from this pandemic without a broad-based labour market recovery. And to be sustainable, this recovery must be based on the principles of decent work – including health and safety, equity, social protection and social dialogue”, said the ILO chief.

Projections

The analysis includes comprehensive labour market projections for 2022 and 2023 and assesses how labour market recovery has unfolded worldwide – reflecting different national approaches to pandemic recovery and analysing the effects on different groups of workers and economic sectors.

As in previous crises, it also highlighted that for some, temporary employment had created a buffer against pandemic shocks.

And while many temporary jobs were terminated or not renewed, alternative ones were created, including for workers who had lost fulltime work.

On average, ILO maintains that the incidence of temporary work did not change.

The publication also offers a summary of key policy recommendations aimed at creating a fully inclusive, human-centred crisis recovery at both national and international levels.

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Green Infrastructure Development Key to Boost Recovery Along the BRI

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The Belt and Road Initiative (BRI) presents a significant opportunity to build out low-carbon infrastructure in emerging and developing economies throughout the world. A new insight report from the World Economic Forum, Advancing the Green Development of the Belt and Road Initiative: Harnessing Finance and Technology to Scale Up Low-Carbon Infrastructure,” illustrates the green potential of this new development paradigm. It also highlights the ‘Vision 2023’ action plan of the Green Investment Principles of the Belt and Road, jointly developed within the World Economic Forum’s Climate Action Platform.

Emerging and developing economies face rising demand for energy and mobility as they grow, industrialise and urbanise. Today’s infrastructure investment decisions will lock in emissions trajectories for decades and could make or break the world’s ability to achieve the Paris Agreement objective of limiting global temperature rise to well below 2°C.

“The Belt and Road Initiative offers a new development paradigm through investment in green infrastructure that avoids the irreversible carbon lock-in effect on global climate change,” said Antonia Gawel, Head of the Climate Action Platform, World Economic Forum. “Collaborative action from public and private stakeholders will be needed to facilitate bankable green infrastructure projects, supported by international standards and forward-looking climate policies. The private sector is especially important for infrastructure construction, bridging the investment gap and scaling up promising green technologies.”

“By accelerating the buildout of low-carbon infrastructure, the Belt and Road Initiative can play a leading role in decoupling economic development from emissions growth for emerging and developing economies,” said Raymund Chao, Asia Pacific Chairman, China Chairman and Chief Executive Officer, PwC. “To capitalise on the increasing global appetite for green assets, the financial sector will play a vital role in channelling investment flows towards green energy and transportation projects.”

The Green Investment Principles (GIP) for the Belt and Road was launched in 2018 to accelerate green BRI investments. Membership has recently expanded to 41 signatories and 12 supporters from 15 countries and regions, holding or managing combined assets in excess of $49 trillion and providing significant funding to BRI projects.

“This insight report uses a number of vivid cases on low-carbon technologies, financial instruments, and policy measures to showcase how the effective combination of such approaches can facilitate the green development of the Belt and Road Initiative. Multilateral cooperation platforms such as Belt and Road Initiative International Green Development Coalition (BRIGC) and the Green Investment Principles for the Belt and Road play an important role in sharing best practices and fostering international cooperation on green development with countries that benefit from the Belt and Road Initiative,” Li Yonghong, Deputy Director General of the Foreign Environmental Cooperation Center, Ministry of Ecology and Environment, People’s Republic of China.

“This insight report offers an important contribution to low-carbon development in diverse countries along the Belt and Road. It signals that financial institutions and enterprises are taking action now to incorporate environment and climate risks into their investment portfolios to avoid transition risks and improve outcomes for sustainable economies and societies. “said Rebecca Ivey, Chief Representative Officer, Greater China, World Economic Forum

“Since the launch of the GIP, our member institutions have invested extensively in green projects in emerging market economies. However, greater efforts are needed to help these economies achieve their climate goals. This report provides a fresh perspective of how green and sustainable finance can facilitate the wide application of low-carbon technologies in emerging markets and developing economies. The GIP will continue to expand its reach and actively support the climate transition activities of the EMDEs,” said Dr. Ma Jun, Chairman of Green Finance Committee of the China Society for Finance and Banking.

The report uses case studies to highlight the financial sector players, financial instruments, low-carbon technologies and conducive local policies and can and need to come together in advancing the green development of the Belt and Road Initiative.

  • JinkoSolar expands its South-East Asia solar photovoltaic module supply chain
  • Silk Road Fund invests in renewable power assets across Africa and the Middle East
  • Huaneng finances and builds Europe’s largest battery storage project
  • Santiago’s innovative PPP financing structure to electrify its bus fleet
  • Kazakhstan advances its transition from fossil fuels to green energy
  • Asian Infrastructure Investment Bank (AIIB) helps investors manage climate and other ESG risks

Above all, this report sets the premise for a global infrastructure development strategy and calls for further action to protect our planet and build a sustainable tomorrow.”

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