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Poland to embed new debt-to-GDP thresholds in spending rule
The Polish government will make the new 48% and 43% cautionary thresholds on public debt-to-GDP, proposed under the private pension fund reform, part of the new spending rule, deputy Finance Minister Wojciech Kowalczyk said Wednesday.

"The bill on OFE will contain the proposal of lowering cautionary thresholds of public debt in relation to GDP, which will be built into the new stabilization spending rule," Kowalczyk said. "The new thresholds will be 48% and 43%."

The 55% threshold and the 60% threshold from the public finance law will stay intact, Kowalczyk said.

At issue are planned changes to Poland's private pension funds OFE, namely the transfer of T-bond portfolios from OFE to social security ZUS, which is expected to reduce public debt by around 8% of GDP. Poland's Finance Minister Jacek Rostowski said that the government would lower austerity thresholds to match the reduction.

The new spending rule is a part of the draft amendment to the public finance act adopted by the cabinet on Tuesday. The rule ties central and local government spending to a running average of GDP growth and is designed to be of anti-cyclical nature. The rule will replace the existing one and hitherto sanctions on crossing the 50% debt-to-GDP threshold.