(Reuters) Greece signed an investment deal worth up to 500 million euros (£360.7 million) a year with the European Bank for Reconstruction and Development (EBRD) on Thursday, gaining a rare financial endorsement from the region for its attempts to remain solvent.
The EBRD and Greece formally signed the five-year agreement at the development bank’s annual meeting in Georgia. It was approved by the bank’s shareholders in March.
“It could help the country’s economic recovery significantly,” Greece’s economy ministry said in a statement.
The ministry added it should boost the funding options of Greek businesses, especially the small and medium-sized ones that have been hit the hardest by the country’s economic crisis.
The EBRD’s decision to start lending in Greece comes after years of debate at the bank about whether a member of the world’s most advanced monetary union fits with the bank’s role of helping countries make the transition to market economies.
The head of the bank, Suma Chakrabarti, has said he hopes to have the first Greek projects in place in coming months but admits Athens leaving the euro would complicate things.
New EBRD forecasts on Thursday predicted Greece’s economy would stagnate this year and the bank’s staff warned if it left the euro, the situation would be far worse both for itself and the countries around it.
The European Bank for Reconstruction and Development is a multilateral developmental international financial institution founded in 1991, using investment as a tool to build market economies. The EBRD was founded in 1991 to create a new post-Cold War era in central and eastern Europe, furthering progress towards ‘market-oriented economies and the promotion of private and entrepreneurial initiative’. The EBRD is owned by 64 countries, the European Union and the European Investment Bank.