MOSCOW (Pakistan Point News / Sputnik - 24th July, 2020) The EU Economic Recovery Fund, agreed by European leaders earlier this week, could become a permanent part of the EU institutional structure that will strengthen the foundations of the eurozone, according to the international rating agency Fitch.
"The EUR750 billion recovery fund agreed by EU leaders is net supportive for EU sovereign ratings, Fitch Ratings says. We think it could become a more permanent feature of the EU's institutional set-up, which would bolster the architectural underpinnings of the eurozone," the agency said in a report published Thursday.
The agency added that it sees the fund as a supportive factor for the EU's sovereign ratings in the medium term, especially for the western and southern nations of the bloc.
"Our assessments of the effect on individual sovereign creditworthiness would reflect benefits from a more robust economic and monetary union, the impact on public finances and growth, and how these might reduce the pandemic's impact," the report added.
The agency said that a more complete impact assessment will become possible when the EU publishes all data on disbursements.
Following the summit, which ended on Tuesday night, EU leaders agreed to create a recovery fund, which is planned to attract 750 billion Euros in financial markets on behalf of the European Union. The funds are planned to be used to restore the most affected sectors of the economy. The European Commission offered to implement 500 billion from the fund as subsidies, 250 billion as loans. As a result, under the pressure of the "thrifty four" - the Netherlands, Denmark, Sweden and Austria - the configuration of the fund looks different: 390 billion euros - as subsidies, 360 billion - as loans.
Another rating agency, S&P, also published a report in which it noted that the fund is a positive factor for the region's solvency and will support its long-term economic and financial stability.
