Moody’s estimates that the full absorption and efficient utilization of the Next Generation EU funds over the next seven years will boost growth by 1 percentage point per year and lead to a cumulative decline of the ratio of debt to gross domestic product by 14.5%.
The rating agency, which is scheduled to release its new assessment of the Greek economy tomorrow, notes that Greece, Italy, Spain and Portugal stand to collect almost half of the extraordinary European Union package of grants and loans; these resources along with those from the regular EU budget will accelerate investments in the country, strengthen growth, reduce the debt and improve its servicing conditions.
Greece, in particular, stands to benefit most in proportionate terms, with the annual growth of EU funding averaging at 2.5% of the country’s GDP, compared to 1.9% of GDP for Italy, Spain and Portugal. That development, Moody’s highlights, will double public investments over the next five years after a decade of low investment due to the financial crisis.
The full absorption of resources, the agency stresses, will also boost the credit profiles of countries such as Greece, and add a full percentage point to the GDP for the next seven years.