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European CommissionThe Second Economic Adjustment Programme for Greece. Fourth Reviewimplementation and the Greek authorities have to finalise these promptly. While preparations of theanti-fraud strategy have proceeded, the implementation has been delayed.125. The Financial Engineering Instruments (FEI) designed to facilitate access to funding for SMEscontinue to under-perform with the exception of the Energy Efficiency Fund. This reflects adifficult market for loans, low appetite for risk taking and low quality of offered collaterals. Followingthe recapitalisation of the banking system, the financial instruments for the new financing period will berestructured in order to play an important role in financing the economic recovery. To this end, aSteering Committee (GR-COM) is in place to enhance monitoring of FEIs implementation and to gatherconcrete experience in order to bring forward policy suggestions on support to SMEs for the current andthe new programming periods and, where necessary, suggest a rationalisation of the current allocationsand instruments.126. The establishment of the Institution for Growth (IfG) has progressed. The Government has passedlegislation in December 2013 to set up an Investment and Growth Fund under the name “Institution forGrowth in Greece” to be registered under Luxembourg law. It is an innovative financing mechanismcombining public and private funds, aiming at channelling resources to Greek SMEs and financinginfrastructure projects.127. The Institution for Growth aims to support profitable investments in Greece while supporting thecountry’s growth policy. The fund will have an initial capital of 500 million EUR. It will financeSMEs and infrastructure projects using equity, loans, guarantees and other financial instruments, andparticipate in equity funds and hedge funds. Three studies by international consultants for the three subfunds(SME lending, SME equity and infrastructure lending) have been completed. A Memorandum ofUnderstanding was signed in July 2013 with KFW who pledged to invest up to 100 million EUR in theIfG. The EIB has also expressed interest to contribute and negotiations with other investors are underway. The debt sub-fund is expected to be operational in June 2014.128. The updated draft Partnership Agreement for Structural and Investment Funds for the nextprogramming period 2014-2020 was submitted to the Commission in March 2014. It is expected todeliver a strategy for sustainable growth complementing and reinforcing the structural reforms that aretaking place through the economic adjustment programme. Front-loading of interventions needs toaddress in the short run the severe consequences of the crisis for the unemployed and those at risk ofpoverty. It will be important to ensure that the transition between the current and the new period issmooth, achieving a full absorption of EU funds without significantly burdening the national budget andconsidering that no project will be transferred to 2014-20 period until the adoption of the PartnershipAgreement and the submission of the new Operational programmes.3.8. AGRICULTURE AND RURAL DEVELOPMENT129. Agriculture provides the main income to more than 1.2 million people and is the recipient of largeEU contributions through the Common Agricultural Policy (CAP). This support comes in threeforms: direct payments, market interventions and structural measures. In 2012 around EUR 3.05 billionwere injected into the Greek economy from CAP funding out of which 76% was direct payment tofarmers. The number of beneficiaries for direct payments in 2012 was about 727,000. The total amountof EU funds that will be allocated to the agriculture sector in 2014-2020 will reach about EUR 20billion. A concrete strategy that includes all three forms of support in a complementary way isnecessary in order to maximise the impact of the EU intervention. The Ministry of Rural Developmentand Food is preparing measures aimed at improving the effective absorption of the EU funds. Thisincludes measures to reduce the substantial amounts of financial corrections related to direct aid, suchas addressing structural weaknesses within the land parcel identification system and the creation of anetwork for advisory and technical services to farmers.64