Athens wants to borrow $3 billion to help tackle unemployment as it prepares more austerity
ATHENS—Greece, embroiled in bailout talks with its international creditors, is requesting a €3 billion ($3.15 billion) loan from the World Bank to tackle the country’s high rate of unemployment in an unusual move by a developed country.
According to Greek government officials, Athens is looking for World Bank funds for a program to tackle the country’s 23% unemployment rate by creating around 100,000 job openings a year over the next three years.
The bank, which acknowledged that Athens has made the approach, has provided technical advice to Greece since 2012.
But the institution typically lends only to developing countries.
A senior Greek official acknowledged that the government may find to it tough to convince the World Bank to agree to the loan.
The request from Athens comes amid protracted talks between the left-of-center government of Prime Minister Alexis Tsipras and Greece’s international creditors, including the eurozone and the International Monetary Fund, on a third financial bailout.
Last month, in an effort to break the deadlock in the bailout talks, the Greek government committed to undertake extra austerity measures in the form of pension cuts and broadening the tax base after its current program ends in 2018, in addition to more reforms of the labor market. The mission chiefs of the country’s creditors resumed talks in Athens last Tuesday.
The two sides are also working on a package of growth-enhancing countermeasures, which will mostly consist of tax cuts. They would be implemented only if the government hits targets for running a primary budget surplus.
The government now faces the challenge of convincing Greeks of the merits of the new program despite seven years of economic crisis, hence Athens’ eagerness to sweeten the pill of more austerity with World Bank funding for a job-creation program.
“We want the agreement to have positive elements; this could be one of those,” the government official said.
The World Bank said it has received the Greek request. “The government of Greece has asked the World Bank to provide technical and financial assistance to address pressing challenges including long-term unemployment, economic competitiveness and growth and social protection,” a World Bank spokesperson said. The bank’s normal approval process would apply, the spokesman said.
Greece’s unemployment rate has started to drop gradually during the past year, but remains at more than double the rate in European Union. About 74% of the jobless have been out of work for more than a year and thus receive no benefits.