Large EU Transfers Could Speed Catching-Up Process

Large transfers from the European Union (EU), through the CAP and cohesion policies in particular, will have a significant impact on the economic future of the new Member States.

+EU transfers to new members could reach 3-4 percent of GDP annually

+Directing inflows to investment, not households, will boost catching up

+Maintaining conservative fiscal policy, existing monetary policy regime essential

EU transfers to the new member states represent a tremendous opportunity to catch up with income levels in the richer part of Europe. But countries must spend the money wisely through investment in their countries' productive sectors.

• Primary Source

IMF Survey, August 2008: Emerging Europe Closes Income Gap with Advanced Europe http://www.imf.org/external/pubs/ft/survey/so/2008/CAR080108C.htm

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