Poland's lower house begins debating 2013 budget amendment
August 29, 2013
Finance Minister Jacek Rostowski
Poland's lower house began debating the government's 2013 budget amendment Wednesday.
Poland was forced into its 2013 budget revision by the notable deterioration in the euro-zone economic growth outlook which affected Polish exports to the euro-zone and by excessively restrictive domestic monetary policy, Rostowski said.
Poland based its 2013 budget on the European Central Bank's forecast for 0.5% euro-zone GDP growth, a figure since revised to a 0.9% recession.
"We were wrong, but almost everybody was wrong," Rostowski told deputies while introducing the budget legislation to the lower house of parliament.
"You need to remember that the Polish economy is dependent on exports to the euro-zone like no other EU nation," Rostowski said, citing a figure at 53.4% of GDP versus low single digits for core nations. "Our forecasts for the Polish economy must be based on forecasts for the euro zone."
Meanwhile, Poland's Monetary Policy Council kept real interest rates at among the highest levels in Europe, Rostowski said. The pace of monetary easing seems "unfortunate" given Poland's record in cutting structural fiscal deficits, he added.
"Room for rate cuts existed and still exist," Rostowski said. "One of the results of the lack of this policy is the need to amend the budget this year."
The government approved a set of proposed budget amendments Aug. 20 after having finally admitted that slow growth had derailed its original plan. The budget amendment proposes allowing the 2013 deficit to rise by some PLN 16bn to PLN 51bn while finding nearly PLN 7.7bn in spending cuts as the government faces a PLN 24bn revenue shortfall.
Budget receipts in 2013 are now expected at PLN 275.7bn, PLN 23.7bn, or 7.9%, lower than expected. Budget spending has been cut to PLN 327.294bn.
The budget was originally built on an assumption of 2.2% GDP growth and 2.7% average annual inflation. At present, the Finance Ministry forecasts 1.5% GDP growth and an average annual inflation at 1.6%