How the Development Law fits in with the Recovery and Resilience Fund

The Deputy Ministers of Finance, Theodoros Skylakakis and Development, Nikos Papathanasis, are urging entrepreneurs to avail themselves of the loans of the National Recovery and Sustainability Plan “Greece 2.0” as soon as possible.

The two ministers said that we are entering a period of increased interest rates, meaning that loans from the National Recovery and Sustainability Plan “Greece 2.0” have added significance and the speed with which companies will respond to this tool is of great importance.

The platform that supports the electronic submission of investment plans for loan financing is active (https://rrf-gobeyond.gr/welcome). In fact, more than 600 investment plans are already under development, of which 20 have been officially submitted.

Loans provided, today, by the credit institutions that are cooperating with the Recovery and Resilience Fund (RRF), have an interest rate of 0.35%. This rate will hold until the first 1.6 billion euros, which was borrowed at a very low interest rate from the Commission, are exhausted. When these are exhausted an interest rate hike will be enforced, which may be reasonable in a first phase and much higher in a second phase.

To get a sense of next phase interest rates, Germany, which borrowed at -0.40% about a year ago, is now at 1.7% and France, which is close to the rate at which the Commission borrows, is at 2.2-2.3% in the current phase.

Even the banks that have received an installment from the RRF, do not guarantee that they will lend at an interest rate of 0.35%.

There are three interest rates that matter:

1. The interest rate of RRF which is at 0.35% and will increase over time
2. The reference rate of the European Commission

• Determined on the basis of EU Communication no. 2008 / C 14/02.
• The reference interest rate consists of the basic interest rate increased by the margins of the above announcement, depending on the rating of the company concerned and the collateral provided.

So reference rate = key interest rate + loan margin

• The basic interest rate is based on the annual IBOR interest rate. Can be searched at the link:

https://ec.europa.eu/competition-policy/state-aid/legislation/reference-discount-rates-and-recovery-interest-rates/reference-and-discount-rates_en