As the crisis gathers momentum and countries such as the UK, US and Germany announce stimulus packages amounting to 10% to 15% of GDP, the possibility has to be faced that central and southeastern Europe (CESEE) will need support of the same order. But who will pay for it?
In theory, the region is in good economic shape. GDP growth has averaged around 3.5% over the past three years. As a result, budget deficits have been mostly moderate and government debt-to-GDP ratios have been steadily declining – to below 50% in several cases.
At the start of the Covid-19 outbreak, that looked sufficient to cushion the impact of a few weeks of lockdown. That view now seems naïve, especially when it comes to the poorer European Union members such as Romania and Bulgaria and the accession states of the western Balkans.
None of these options seems likely to deliver the scale of support required to see emerging Europe through the crisis and into recovery
Many countries should still be able to raise a certain amount of emergency funding themselves.