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Budgetary transfers between the EU and the new Member States: manna from Brussels or a fiscal drag?

Martin Hallet (Directorate for International Economic and Financial Affairs), Filip Keereman (Directorate for the Economies of the Member States)

Budgetary transfers between the EU and the new Member States: manna from Brussels or a fiscal drag?pdf(298 kB) Choose translations of the previous link 

Member States receive funds for agriculture, structural development (e.g. infrastructure works) and internal policies (e.g. training, research, environmental protection), but in exchange have to make a contribution to the EU budget. Given the overall low level of income per head as compared to the rest of the EU, the ten new Member States receive a considerable amount of transfers with a view to fostering their catching-up process. While it is often argued that EU accession increases a country’s budget deficit, the calculations show that the fiscal impact of the EU financial flows in the medium-term should be favourable. Nevertheless, the challenges in restructuring budgetary and administrative procedures to be able to absorb the projected payments in the EU financial framework should be recognised.

(Country Focus. 02. February 2005. Brussels. 6pp. Tab. Free.)

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