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Qatar signs deal to invest up to $5 bln in Greece
Qatar eyes energy, transport, banking investment deals; To start identifying projects within 2 months.
September 25, 2010 4:20 by Reuters
Greece and Qatar have signed a framework deal that paves the way for the Gulf emirate to invest up to $5 billion in energy, banking and other areas, giving a boost to the crisis-hit country.
Wooing foreign investment is key for Greece, which battles its worst recession in decades as it clamps down on state spending to slash its budget deficit under an EU/IMF bailout agreement.
Greek officials welcomed the non-binding memorandum of understanding, sealed late on Thursday in New York with Qatar Investment Authority (QIA), as a proof of investor confidence following months of market bashing over the debt crisis.
“The prospect of cooperation with such an important and credible international fund shows the Greek government’s efforts to regain the trust of investors … are bearing fruit,” Investment Minister Harris Pamboukis said in a statement.
No specific projects were mentioned in the document. The QIA and Greece will set up within two months a joint committee to identify possible deals, mainly in real estate, tourism, energy, banking, ports and airports, the text said.
The committee will then meet every three months.
It was encouraging that the memorandum, although non-binding, mentioned a specific amount at such an early stage in the process, an official with direct knowledge of the talks told Reuters.
“The Qatar Investment Authority confirms its intention to invest in the Hellenic Republic… with an aggregate investment target budget of up to five billion U.S. dollars,” said the memorandum, published by the Greek Prime Minister’s office.
The economy needs to pick up to boost government revenue as Athens seeks to cut its budget deficit to 8.1 percent of GDP this year from 13.6 percent in 2009, trying to convince markets it is tackling a debt crisis which forced it to secure a 110 billion euro ($141 billion) EU/IMF bailout earlier this year.
Greece’s efforts to attract more foreign direct investment (FDI), which has fallen in the past two years as business fled to the Balkans, face concerns about bureaucracy, economic conditions and regular strike action.
In response to some of these worries, Athens said earlier this month it would set up a fast-track procedure to cut red tape for big investments. The main labour union plans no strike anytime soon, also easing some concerns.
Analysts welcomed Friday’s announcement. “All types of investments should benefit Greece at the current time of fiscal concerns,” Kyprou Securities wrote in a note.
Qatar’s Prime Minister Hamad bin Jassim al-Thani first expressed interest in investing in Greece during a visit to Athens in May, during which he signed non-binding agreements to build an LNG terminal and a power station in western Greece.
(Additional reporting by Renee Maltezou; Editing by Ron Askew)