UniCredit: governments must boost absorption of EU funds

Flagging demand for loans from the population and from companies is the reason why lending remains weak, and the solution needs to come from the authorities, who could boost absorption of European funds.

“Perhaps the Central and Eastern European model has been too aggressive, but it is not this model that collapsed, the crisis was triggered by problems in the USA. There is no need for a revolution,” says Federico Ghizzoni, head of UniCredit’s operations in Central and Eastern Europe.

He believes the exit from the crisis can be achieved only by reviving loan demand, because the supply is already there, but this is the governments’ job.

“Full absorption of European funds is absolutely necessary. They can contribute up to 2% of the annual growth of the Gross Domestic Product.”

Romania has almost 20 billion euros in European funds allocated for 2007-2013, but its absorption rate is one of the lowest, at around 10%, according to the “CEE Banking: A new model out of the crisis” study, authored by the UniCredit group. The Italians expect 0.4% growth for Romania this year, and 3.4% in 2011.