All CEE (Central and Eastern Europe) members will be net recipients of grants and will have access to new, cheap loans – Fitch Ratings stated in a recent Fitch Ratings 2021 Outlook for Emerging Europe Sovereigns, which includes Georgia. Fitch Ratings views the Next Generation EU fund as net supportive for EU sovereign ratings over the medium term.
According to Fitch, the extent of any rating implication will depend on a number of factors, and the first is the impact on the public finances. “Funds will be disbursed via grants and loans: the grant portion will not form part of the direct debt stock of the recipients” – Fitch Ratings said.
A second factor is how the funds will be spent and their effectiveness at promoting a broad-based recovery and enhancing medium-term growth potential (often a rating weakness in CEE). “If the funds are well-directed, this can provide a substantial boost to GDP growth for the net recipient countries with a limited direct public finance impact” – Fitch Ratings said.
