Despite the economic devastation sweeping Greece, a bust Greek government has decided to throw nearly €100m at building a new Formula One Grand Prix racing track.

Quite where the money is coming from isn't clear while Greek Prime Minister Antonis Samaras is also set to unloose more austerity cuts at pensioners and civil servants.

Investing


Max speed for cuts

In many parts of Greece food handouts from farmers to local people are increasingly commonplace. Greek suicides are rising. Increasing numbers of Greek professionals are fleeing the country. More cuts in national healthcare are planned. Yet the Government is building a new racing car circuit near Patras.

Greek Deputy Development Minister Notis Mitarakis, according to Bloomberg, has also signed off plans to expand new facilities at the luxury Elounda Bay palace hotel in Crete, which includes a new conference center, again, costing millions of euros. The Greek ministry has defended the plans, claiming new jobs will be created from the projects, attracting tourists.

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Infrastructure boost?

The Greek economy looks likely to contract by more than hoped in 2013, dragging the country into its sixth year of recession. Specifically the Greek government thinks a 25% fall in GDP by 2014 is looking realistic. If true, that means more pressure to ease the country's €130bn bailout terms.

Meanwhile Notis Mitarakis says the country needs to slash bureaucracy and keep up with investment projects - like building a new F1 circuit.

But Greece, critically, needs inward investment. Greek foreign direct investment amounted to just $1.8 billion in 2011, it's claimed, compared to around $420 billion that flowed across the EU as a whole, according to figures from the Organisation for Economic Cooperation and Development.

Greek PM Antonis Samaras is desperate for credibility. His number one problem, he claims, is unemployment. But building a race circuit for jobs looks both extravagant and desperate.

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