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EU: newcomers use aid funds well, euro would help

Published 02/04/2009, 07:15 AM
Updated 02/04/2009, 07:16 AM

BRUSSELS, Feb 4 (Reuters) - European Union newcomers from central and eastern Europe are tapping the bloc's aid funds efficiently, the EU's regional policy chief said, despite earlier fears they might fail to absorb much of the money.

EU Regional Aid Commissioner Danuta Huebner also said that joining the euro zone quickly would help countries such as Poland or Hungary to use EU funds better by removing risks related to foreign exchange volatility.

"If we insist on the division between new and old member states ... there is no problem related to the absorption of EU funds among new members," Huebner told a news conference on Wednesday.

The EU has allocated about half of over 300 billion euros ($391 billion) from its regional aid budget for 2007-2013 to the 12 countries that joined the bloc in 2004 and 2007.

Huebner said countries that remained outside the euro zone faced difficulty in planning their expenditure because of big swings in their currencies' exchange rate against the euro.

"They should ideally join the euro, because those changes introduce additional risk," she said.

In Poland, the biggest EU country in the region, the zloty currency strengthened to some 3.25 to the euro last year from more than 4.6 in 2004, meaning the amount of EU funds in local-currency terms shrank significantly.

But as the global financial crisis started to bite, the zloty has shed 46 percent against the euro since its all-time high last July.

Among EU newcomers, Cyprus, Malta, Slovenia and Slovakia have adopted the euro. Poland hopes to do so in 2012, but many analysts say the target is too ambitious. (Reporting by Marcin Grajewski, editing by Dale Hudson)

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