Infrastructure in Greece has been severely affected by the deep recession. The total value of infrastructure projects has decreased by c.77% between 2006 and 2016, while its share in Greek GDP has fallen by 2.6pps in the same period. The erosion of infrastructure investment from 2006 to 2016 resulted in a €62bln investment gap. Greece is ranked 26th among the EU countries in terms of quality of infrastructure, revealing also a quality gap.
Infrastructure investments, having an economic multiplier of around 1.8x, can boost demand of other sectors and lead Greek economy to growth.
Key findings:
- Between 2014 and February 2017, 16 infrastructure projects were completed with a total investment of €2bln. Moreas Motorway was the largest project completed during that period (€ 1bln). The backlog of both in progress and planned infrastructure projects is estimated at around €21.4bln up to 2022 or c. € 3.6bln on an annual basis
- From the 69 projects that will be delivered within the next five years, 34 refer to Motorways, Ports and Airports, 15 to Energy, 10 to Rail and 10 to Water Supply and 10 Waste Management
- Most of the energy and rail projects are in progress, motorways are about to finish, while waste management and tourist product are still in primary development stage. Investments in tourism product upgrade (9%), as well as waste management and water supply investments (4%) are key for growth and upgrade of life quality
- Key challenges in order to meet infrastructure financing needs are: high project costs, user-charges that are below project cost, limited public financing, barriers to private investment
- It is vital to revitalise infrastructure project investment through the effective use of the NSRF (ESPA), the creation of incentives for private sector participation (concessions), as well as the gradual increase of state funding
- PPPs and Project Bonds could provide a significantly higher private sector participation in infrastructure funding, adding a low risk element in institutional financiers’ portfolios, having as prerequisite the business environment improvement and lower levels of political uncertainty
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Director, Internal Firm Services, Marketing & Communications, Athens, PwC Greece
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