Eastern European economies are set to benefit form 30 billion euros of investment over the next two years to help underpin their economies against competition from the eurozone.
A triumvirate of investment organisations is putting up the money for investment support economic restructuring, consolidation and diversification.
The World Bank, European Investment Bank and European Bank for Reconstruction and Development are combining forces to fund long term competitiveness by increasing the amount of long term credit available to the ailing Eastern European economies.
Analysts believe the largest lump of cash will go to Poland – about 12 billion euros, followed by Hungary and the Czech Republic, which are likely to pick up around 2 billion euros each.
Other countries around the Balkans are set to win some of the development fund, but on a much smaller scale than the big three.
EIB group president Werner Hoyer: “I welcome this coordinated effort. I believe that each of us can contribute to consolidated growth in Central and South Eastern Europe. The EIB, as the bank of the EU, will support growth and employment in the region and always keeping the need to improve long term competitiveness as the guiding factor.”
The news is cheered by analysts as the money and headlines in this corner of Europe generally go to Russia and Turkey, which are both experiencing growth.
This initiative aims to try to change the way the rest of the world looks at Eastern Europe by pulling the economies up by their bootstraps with a financial cushion against the problems of one of their chief trading partners – the Eurozone.
The finer details of the blueprint for economic survival have yet to be finalised by the investment group and governments involved. Much of the money is destined for the public sector, but a proportion will go to private projects as well.
Liesbeth Rubinstein, Emerging Markets Fund Manager at Invesco Perpetual, supports action that props up economic recovery in central and south-eastern Europe
“The growth proposal directly responds to how eurozone problems are affecting the economies of emerging Europe,” she explained.
“Financing will be provided as long-term loans to the private and public sector. Although the scheme is focussed on the Balkans and Baltics, based on previous programs, we would expect Poland to gain the most, followed by the Czech Republic and Hungary.”
“Faced with continued uncertainties from the eurozone, we welcome the injection of fresh money into central and south-eastern Europe as it will support growth and employment in the region.”