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Macro-fiscal policy challenges and public investment in new EU member states

Author

Listed:
  • Schwartz, Gerd

    (International Monetary Fund)

  • Corbacho, Ana

    (International Monetary Fund)

  • Cui, Qiang

    (International Monetary Fund)

  • Ganelli, Giovanni

    (International Monetary Fund)

  • Manasse, Paolo

    (University of Bologna.)

Abstract

Most new EU member states (NMS) need further fiscal adjustment to support economic growth and macroeconomic stability. In this context, achieving income convergence with other EU members rests more with maintaining productivity growth, attracting foreign savings, and improving investment efficiency than with increasing government spending (including for infrastructure). Additional institutional fiscal reforms, aimed at improving expenditure efficiency and facilitating private sector investment, will be needed to support these objectives. However, further fiscal adjustment and reforms do not necessarily need to depress public investment. New financing options for public investment - including from various EU funds and through public-private partnerships - can ease existing fiscal and macroeconomic constraints, but present both new opportunities and challenges that need to be handled carefully.

Suggested Citation

  • Schwartz, Gerd & Corbacho, Ana & Cui, Qiang & Ganelli, Giovanni & Manasse, Paolo, 2008. "Macro-fiscal policy challenges and public investment in new EU member states," EIB Papers 5/2008, European Investment Bank, Economics Department.
    • Handle: RePEc:ris:eibpap:2008_005
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    More about this item

    Keywords

    new member states; sustainable growth; convergence; infrastructure investemnt; public-private partnership; EU fund;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • H62 - Public Economics - - National Budget, Deficit, and Debt - - - Deficit; Surplus

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