Government unveils draft 2010 budget

2009-09-11



The government on 8 September approved the draft budget for 2010. It envisages a sharp increase in the budget deficit, to PLN 52.2bn (approx. €12.6bn), or 3.8% of GDP, due to a combination of significantly lower tax receipts and built-in increases in non-discretionary spending.
This is more than twice the figure projected for 2009 and the highest nominal value on record. However, Prime Minister Donald Tusk and finance minister Jacek Rostowski were careful to stress that this level of deficit was perfectly manageable, and that thanks to an acceleration of privatisation (which is to bring PLN 25bn, or €6bn by the end of next year), public debt will stay below the 55% of GDP safety threshold which triggers drastic fiscal adjustments. At the same time, Michal Boni, Tusk’s chief adviser, pledged that the government would not raise taxes during this Parliament.
The draft budget for 2010 is premised on macroeconomic assumptions which include GDP growth of 1.2%, annualised inflation of 1%, a 2.8% increase in exports and a 3.2% rise in imports, and a current account deficit of 2.1% of GDP. The Ministry of Finance expects that economic growth will accelerate to 2.8% in 2011, to 3% in 2012 and to 3.4% in 2013.