EU Funds Underused in Greece: Audit Highlights Missed Opportunities for Recycled Investment

European funding programs are designed to strengthen cohesion among member states, serving as a financial shield during crises, such as the pandemic—or historically, like the 1929 crash. But a recent special report by the European Court of Auditors (ECA) shows that this goal is only partially achieved, especially in the case of loans and guarantee schemes, where capital recycling often falls short.

Unlike grants, funds provided through financial instruments must be repaid, allowing them to be reused for new projects. This “recyclable” use of funds enhances efficiency and sustainability, enabling the same public resources to benefit more businesses and citizens over time.

Key Findings of the Audit

The ECA identified several obstacles to effective recycling of returned funds during the eligibility period:

• Member states face pressure to exhaust all initially allocated resources before reusing repaid amounts.
• Long-term nature of certain investments limits immediate recycling.
• A focus on attracting private investors can divert attention from reusable public funds.

After the eligibility period ends, repaid funds—so-called “legacy capital”—are often redirected to support cohesion policy objectives. However, EU law allows these funds to be converted into grants, undermining the intended leverage of recyclable capital.

Between 2014 and 2020, only 12 of 61 financial instruments fully reused repaid amounts during the eligibility period. Another 19 applied partial amounts to management fees or operational costs.

Funding trends:

• 2007–2013: €16.9 billion allocated to financial instruments
• 2014–2020: €31 billion
• 2021–2027: €19.4 billion (excluding COVID-19 reallocations)

Overall, only ~5% of cohesion budgets were channeled through financial instruments across these periods. Most EU countries adopted such instruments, except Ireland and Luxembourg.

The Greek Case

Greece was included in the audit alongside Germany, Italy, Hungary, and Slovakia. The review aimed to optimize fund reuse post-2027 by identifying why recycled use remains insufficient and how to incentivize it further.

Key findings for Greece:

• TEPIX II Loan & Guarantee Fund (est. 2016): Although generally successful, only 89.7% of the initial program was used by the end of the eligibility period, leaving little room for recycling.
• ELTEp Guarantee Fund: Nearly a decade after the eligibility period ended in 2015, roughly €300 million of legacy capital remained idle in government accounts. Interest earned goes to the national budget rather than supporting new projects.

The ELTEp fund played a critical role during the Greek financial crisis, facilitating EIB lending to Greek commercial banks, which in turn provided loans to SMEs unable to access capital elsewhere. After 2017, banks could secure funding from capital markets, and the fund was effectively liquidated.

• Decision pending: Greek authorities have yet to decide on recycling legacy funds for TEPIX II and EQUIFUND, leaving a decade of unutilized capital that could have reinforced cohesion policy goals.

Implications

The ECA audit highlights that structural inefficiencies and legal ambiguities are preventing Greece from fully leveraging EU financial instruments. Unlocking the potential of recycled capital could enhance the country’s investment impact, support SMEs, and accelerate economic cohesion—especially critical as the EU transitions to the 2027–2033 programming period.

Without decisive action, legacy EU funds will continue to sit idle, generating interest for the national budget rather than driving sustainable, high-leverage investments across Greece.