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.

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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