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Nowotny, Ewald --- "Financing of enlargement and catching up" [2003] ELECD 109; in Tumpel-Gugerell, Gertrude; Mooslechner, Peter (eds), "Structural Challenges for Europe" (Edward Elgar Publishing, 2003)

Book Title: Structural Challenges for Europe

Editor(s): Tumpel-Gugerell, Gertrude; Mooslechner, Peter

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843764748

Section: Chapter 9

Section Title: Financing of enlargement and catching up

Author(s): Nowotny, Ewald

Number of pages: 9

Extract:

9. Financing of enlargement and
catching up
Ewald Nowotny

CONTINUING ­ BUT SLOW ­ CONVERGENCE

In the Central and Eastern European (CEE) accession countries, GDP
per capita ­ measured at purchasing power parity (PPP) rather than
market exchange rates ­ went up from an average of about EUR 6200 in
1994 to about EUR 9100 in 2001, implying an annual average growth rate
of 5.75 per cent. During the same period the PPP GDP per capita in the
EU rose from an average of EUR 17 200 to EUR 23 400 (see Figure 9.1).
As a result, the income of the accession countries rose from 36 per cent of
the EU average in 1995 to almost 40 per cent in 2001.


THE PUBLIC SECTOR

As Figure 9.2 indicates, however, developments have been quite uneven
across countries. Fiscal deficits widened in the three largest economies, that
is Poland, the Czech Republic and Hungary, and in the Slovak Republic.
The deterioration ranged from 2.25 per cent of GDP in the Czech Republic
to 0.75 per cent in the Slovak Republic, resulting in a fiscal deficit of around
5.5 per cent of GDP in both countries.
The other six countries ­ Bulgaria, Estonia, Latvia, Lithuania, Romania
and Slovenia ­ made progress towards fiscal consolidation and have, with
the exception of Romania, small deficits or even fiscal surpluses (Bulgaria
and Estonia). It is probably worth noting that, except for Slovenia, all
countries with an improved fiscal position have been implementing macro-
economic stabilization and ...