Government approves redrafted 2012 budget based on 2.5% GDP growth

2011-12-07



The government on 6 December approved a redrafted 2012 budget that takes account of the deterioration in the global economic climate since its first preliminary version was prepared earlier this year. It is premised on the Finance Ministry’s intermediate case scenario for GDP growth in 2012 and on first effects of its fiscal consolidation programme outlined by Prime Minister Donald Tusk last month.
The 2012 budget assumes that the Polish economy will experience growth of 2.5% next year. This, coupled with a 2-point increase in the incapacity benefit contributions paid by employers effective from 1 February 2012, as well as some other tax increases and a wage freeze in the public sector, will hold the central budget deficit to PLN 35bn (approx. €8.4bn) on revenues of a little over PLN 293.8bn (€70.4bn) and expenditures of just over PLN 328.8bn (€78.8bn), bringing the general government deficit below 3% of GDP.
Public debt as measured by the domestic methodology (on which Poland's constitutional debt limits are based) will fall to 52.4% of GDP in 2012, down from a projected 53.7% in 2011, according to the new draft budget (an updated Strategy for Managing Public Debt in 2012-2015, unveiled by the Finance Ministry on 6 December, forecasts that it will drop to 47.4% of GDP in 2015). The general government debt, as measured by the Maastricht debt methodology, is to be 56% of GDP in 2012, down from 56.7% in 2011 (by 2015 it is expected to fall to 50.2% of GDP).
The unemployment rate is forecast to stand at 12.3% at the end of 2012, compared with 11.8% in October 2011 (latest official figures). Average annualised inflation is to drop to 2.8% next year from 4.1% projected for 2011.
The zloty to euro exchange rate is forecast to fall to PLN 4.17 to €1.