2008 budget approved, Hungarian scenario is possible

13-09-2007, 07:04

Warsaw (Puls Biznesu) – Unless Poland withdraws from expensive plans approved by the government, the deficit will grow, Zyta Gilowska, deputy PM and Minister of Finance warns.

Slightly over PLN 28 billion (EUR 7.3 billion) of deficit with PLN 275 billion of expenditures and PLN 247 billion of revenues with GDP growth slightly lower than today, lower inflation and over 5 percent consumption dynamics, these are just some of the budget bill for next year approved of yesterday. Zyta Gilowska believes that MPs were generous.

Economists warn that the bill does not provide for unexpected worsening, the deficit will be higher than this year and social spending grows.

“No one thinks what happens if the GDP falls to 2-3 percent”, Rafal Benecki, ING economist worries.

“This is extremely incredible budget. Zyta Gilowska said it herself when she admitted the budget does not include some refunds. The deficit may grow by PLN 5 billion. We have not had such situation in years”, Ryszard Petru, Bank BPH economist stressed.

In his opinion, the situation brings the threat of deficit explosion and competitive loss of the Polish economy. Poland may follow Hungarian example within 12-24 months.

(PLN 1 = EUR 0.262)

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