21.04.2021
MOODY'S: BULGARIA MAY BE AMONG THE WINNING COUNTRIES FROM EU FUNDS
Croatia, Bulgaria and Romania can add the most significant growth to their GDP compared to other EU members from Eastern Europe - by 1.0%, 1.0% and 0.8 percentage points per year respectively in the period 2021-2027, against an average increase of 0.2 percentage points for this part of the Union, assuming full absorption of traditional Union funding and EU Rehabilitation and Sustainability Mechanism (RRF) grants.
A similar conclusion was made by the credit agency Moody's in its report on the countries of Central and Eastern Europe, reports bne IntelliNews (former business media Business New Europe, which is focused on emerging markets).
EU funding will stimulate economic growth, but institutional challenges will slow or even limit the benefits for some countries, the rating agency warned.
The final levels of investment will ultimately depend on how much money these countries will be able to absorb from EU financial funds.
Countries with less experience in the past, such as Romania, will need to "upgrade institutional capacity, which is not easily achievable and takes time to materialize," the Moody's report said.
In addition to stronger economic growth, fiscal indicators are also likely to improve in these countries. With higher economic growth, the debt-to-GDP ratio will fall cumulatively in the EU by 2.3 percentage points over the period 2021-2027, with Croatia, Romania and Bulgaria recording the largest total reductions respectively by 9.2, 4.3 and 3.7 percentage points during this period.
"However, the challenges of implementing the funds can slow or even reduce the positive effects of them," said Heiko Peters, vice president and senior analyst at Moody's Investors Service.
The challenges will be most serious in the countries that will benefit the most from EU funds, such as Croatia, Bulgaria and Romania, the rating agency's report said.
The previous absorption of European funds varied among the countries of Eastern Europe. According to Moody's, only Poland and Slovenia had a 100% absorption rate during the 2007-2013 budget period. During this period, the absorption rate was the lowest for Croatia (84.2%) and Romania (90.5%), which together with Bulgaria (with absorption of 97.3%) will gain the most from EU funding if the current funding is fully utilized.
