At the start of 2026, with just a few months to go before the deadline for the loan portion of the Recovery and Resilience Facility (RRF), senior bankers in Greece were worried. Both in public and in private, executives did not rule out the possibility that absorption of the funds would fall short, perhaps not even reaching 75 percent of the total budget available.
That anxiety deepened in March, when the Ministry of National Economy and Finance moved the deadline for the program up by three months. Under the revised timeline, every contract had to be finalized by the end of May, rather than later in the year as originally planned.
At the time, the Bank of Greece, the country’s central bank, described the goal of fully committing the funds as “extremely ambitious” in one of its reports, citing the pace of contract signings up to that point. According to figures the central bank had presented just weeks earlier, the loans banks had actually signed added up to less than 60 percent of the funds available.
Bankers attributed the shortfall to a lack of mature, investment ready projects, and to a limited pool of applicants who met their lending criteria.
Task forces close the gap
Rather than accept a shortfall, banks formed dedicated task forces after the deadline was moved up, dedicating additional staff to accelerate the signing process. The result exceeded expectations. Not only were the funds fully committed, but banks estimate that investment demand worth 6 billion to 8 billion euros could not be processed in time and went unmet.
Fokion Karavias, chief executive of Eurobank, one of Greece’s largest lenders, offered a pointed assessment in mid May, saying that coordination among the government, the banks and businesses “was probably not the best possible.” He added that part of that unmet demand would likely be absorbed through conventional bank lending in the coming years, while some projects would be canceled or reduced in scope.
The final figures
The program ultimately met its target. According to final data from the Bank of Greece, lenders committed 13.2 billion euros in EU funds, with banks providing an additional 9.4 billion euros of their own financing.
Including 6.6 billion euros in equity contributed by businesses themselves, the program mobilized a total of 29.2 billion euros in investment. For every euro borrowed through the RRF, roughly 1.20 euros in additional financing followed.
On average, EU funds covered 45.2 percent of project costs, bank loans covered 32.2 percent, and companies’ own capital accounted for the remaining 22.6 percent.
Where the funds were directed
Data from the Ministry of National Economy and Finance shows that 798 loan contracts were signed in total ahead of the May 29 deadline.
Small and medium sized enterprises accounted for 489 of those contracts, or 61 percent, financing projects worth roughly 5.6 billion euros, about a fifth of the program’s total value.
The remaining 309 contracts went to large enterprises, which secured the majority of RRF lending to finance approximately 22 billion euros in investment.
Banking sources estimate that about 35 percent of the financing was directed toward the energy sector, with more than 25 percent going to tourism, followed by industry and manufacturing.
Disbursement still lies ahead
Signing the contracts was only the first stage. What remains is disbursing the funds and completing the underlying projects, a process that will determine the program’s ultimate outcome.
Executives at Greece’s systemic banking groups, which handled the bulk of the loan processing, say the funds will be released gradually over several years, given that most of the investment plans involved are complex and long term in nature.
An estimated 50 percent of the RRF loan resources have reached the real economy so far, a figure expected to approach 60 percent by the end of this year. Disbursements are projected to continue through 2027 and 2028, with the Bank of Greece anticipating some payouts as late as 2029.
The case for low borrowing costs
Bankers point to the low cost of borrowing as a favorable sign for the long term viability of these investments. On the EU funded portion of the loans, rates begin at 0.35 percent for smaller businesses and 1 percent for larger ones.
A Bank of Greece report put the weighted average interest rate across all RRF loans at 1.72 percent, well below the average cost of other business loans in Greece. By comparison, fixed term loans to non financial companies carried an annual cost exceeding 5 percent between 2023 and 2025.
What follows the RRF
The expiration of the RRF will not mark the end of preferential financing in Greece, according to a source at one of the country’s systemic banking groups. That role is expected to pass primarily to the Hellenic Development Bank, the Greek arm of the EU’s InvestEU program, which is backed by guarantees from the European Investment Fund, and to credit lines from the European Investment Bank.
The Hellenic Development Bank recently received Pillar Assessment certification from the European Commission, a designation that allows it to operate as a full EU partner and manage the roughly 2 billion euros allocated to it from the RRF. The certification is expected to benefit small and medium sized Greek businesses, which will have greater access to financing on favorable terms through loan guarantees or interest rate subsidies.
Conventional commercial bank loans also remain available, with competition increasing from smaller, non systemic lenders. Following a decade of steady deposit growth and the sector’s return to investment grade credit ratings, which has reopened international markets to Greek banks, conditions appear favorable for both retail and business lending.
Source: OT.gr
