Moody's: Update of Poland's road building programme is credit positive

By bne IntelliNews June 12, 2013

Moody's Investors Service has commented on the Polish government's last week decision to approve a number of road building projects and said that the move is credit positive for the sovereign rating (A2 stable).

The agency expects that around 50 projects will be opened to a tender process worth a government-estimated PLN35.7bn (2.2% of GDP) and will be financed from European Union (EU, Aaa negative) funds and the National Road Fund (KFD). The progress on allocating these infrastructure projects will hasten their construction and will provide a boost to the slowing economy, which is a credit positive.

Quick progress towards implementing infrastructure investment programmes will have a positive effect on the economy as the multiplier effect of this type of expenditure tends to be strong. Therefore, we believe that over the life of the program, and if completed on a timely basis, these road projects are likely to boost real GDP growth by 0.1-0.2pps on an annual average, Moody's stressed.

The government updated its 2011-2015 road construction programme, so that total outlays on fast-track road construction will amount to PLN 35.73bn (EUR 8.4bn) by 2015.

In 2007-2012, a total of nearly 2,500 km of fast-track roads (express roads and motorways) was delivered, with another 775km now under construction. Until this year, a total of PLN 83.8bn was spent on these projects.


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