Greece’s government has reached a financial settlement with contractors to unfreeze the construction of four, multi-billion-euro toll roads, the country’s biggest infrastructure project.
The global financial crisis and harsh austerity measures being imposed by the governmentonthe orders of international lenders has cut the country’s Gross Domestic Product (GDP) by about 20 percent in three years and created a record 27.2 percent unemployment, so there are hopes big projects such as highway development can help create a rebound.
In 2007, two years before its worst debt crisis in decades, Greece signed concessions for local and foreign investors including Germany’s Hochtief and France’s Vinci to build four highways.
The project – financed mainly through bank loans, toll revenues, private investors and European Union structural funds – stalled when the crisis struck, due to red tape and the reluctance of banks to give loans.
Greece’s development ministry said on that work would resume this month after the government agreed to pay contractors 350 million euros ($459.43 million) in damages over the delays. “After tough negotiations and several months of efforts, we signed an agreement with the concessionaires that the projects will start immediately before Easter, without any delays,” Development Minister Kostis Hatzidakis told reporters.
Greece is rushing to complete the roads by the end of 2015 to avoid losing EU funds. Investment in the country has plummeted by about 60 percent since 2008. A development ministry official said negotiations between the investors and more than 40 foreign and Greek banks were helped along by a new bailout Greece secured in December that dispelled fears it could be forced out of the Eurozone.
Construction has been one of the main pillars of the economy but a five-year recession has hit the sector hard, with half of its jobs lost since 2008 when building activity hit a peak. “The restart of the four toll roads symbolizes the kick-start of the Greek economy. Some 25,000 new jobs are being created,” Hatzidakis said.
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