Polish Draft Budget Plan Approved

by Ulrika Lomas, Tax-News.com, Brussels

12 December 2008

The Polish assembly approved the 2009 budget plan last Friday, which commits the government to lower spending in line with targets to ensure the country's qualification for adoption of the Euro.

The draft gained a majority vote with 236 MPs voting to pass the budget versus 190 MPs who opposed the draft. The budget included public spending cuts of PLN1.7bn (EUR430m) to offset the projected fall in revenues. Projections for economic growth were slashed to 3.7%. The government previously hoped to achieve 4.8% growth in 2009.

Poland’s former Deputy Prime Minister and Finance Minister Leszek Balcerowicz has warned that hard times are ahead for the Polish economy, saying even a 3% growth rate would be a "success". He told a lecture in Washington, D.C. that: “The most important thing for Poland is to try to get through these hard times with budget discipline and I believe it will do so.”

Experts agree with Balcerowicz stating that the 3.7% target is too optimistic, many believe falling demand for Polish exports coupled with drops in consumer consumption as many fear for their job security will put downward pressure on the Polish economy’s growth rate.

"Generally I can say that assuming more realistic forecasts for economic growth is a positive step. It is better when a budget is compatible with the future reality," said Balcerowicz. "There is a lot of uncertainty when it comes to the future pace of economic development, and not only for Poland but for the whole world. It cannot be excluded that Poland's economy will grow even slower. The next year is going to be a difficult one for the country," the former deputy PM added.

Poland must curb its budget deficit to ensure its eligibility to adopt the Euro in 2012.

The budget is still subject to a vote by the Senate and must ultimately be approved by President Lech Kaczynski.

Recommended