A hurdle for Minister Hausner
The government's failure to push key fiscal reforms through Parliament last Friday is likely force its already endebted Social Security Office (ZUS) back to the lenders next year.
Poland's interim leftist government lost two key votes in moves that officials quickly estimated could cost the 2005 budget zł.1.8 billion.
The reaction on the Polish Treasury bond market was visible, albeit temporary, with T-bond sales shaking shortly after the announcement. The stutter was short-lived with prices returning to pre-news levels well within an hour of the votes.
Parliamentary deputies now face a mid-week plenary budget debate in which they will either have to find zł.1.8 billion in spending cuts or previously unseen revenues, convince the government to allow a deficit increase or, as early signs suggest, force ZUS back to its already extended lenders.
"I am very curious about how consistently deputies behave and in what manner they will fulfill next year's budget," an irritated Minister of Labour Krzysztof Pater told reporters after watching the government lose its second vote of the day.
Pater quickly suggested that the burden would eventually go to ZUS and its lenders, but warned that ZUS credit lines were not infinite.
"The lending power of Polish banks [for ZUS] is running out," Pater said.
The Minister estimated the loss to the 2005 budget plan at around zł.1.8 billion after the consecutive votes.
"This is really the first negative news that we have had in days or even in weeks," said Citibank Handlowy's chief treasury analyst Katarzyna Zajdel-Kurowska.
Most notably, deputies rejected a government plan that would have raised select corporate contributions to social security premiums-a zł.1.2 billion hit to the 2005 budget. The other bill affected pension and disability payments.
ZUS is a big player on the lending market, with analyst estimates of total borrowing by the social security funds at some zł.5 to 6 billion already in 2004.
Poland's united opposition was boosted by four deputies from the ruling party who joined forces against the key bill, an element of the fiscal reform program known locally as the Hausner Plan.
Previous voting has already enacted what officials consider to be some 50 percent of the Hausner plan, according to statements made in mid-October. One key element of the plan concerning pensions in the farming sector remains in Parliament.
The vote was the first major snag for the government's 2005 budget plans, after what had been a relatively uneventful and undramatic parliamentary budget debate compared with previous years.
Under Polish constitutional rules, deputies are not allowed to alter the size of budget deficit proposed by the cabinet, although the cabinet is allowed to amend its budget bill, including the deficit level, at nearly any point during the process.
Deputies, however, have become increasingly skilled in recent years at finding revenues which the cabinet had not been able to plan, thus opening the door for pork-barrel spending.
Deputies deployed exactly this tactic recently on the Public Finance Committee when they were able to cut debt servicing costs by zł.1.3 billion and shift the funds to a one-off bonus for pensioners. (PAP, J.T.)
Poland's interim leftist government lost two key votes in moves that officials quickly estimated could cost the 2005 budget zł.1.8 billion.
The reaction on the Polish Treasury bond market was visible, albeit temporary, with T-bond sales shaking shortly after the announcement. The stutter was short-lived with prices returning to pre-news levels well within an hour of the votes.
Parliamentary deputies now face a mid-week plenary budget debate in which they will either have to find zł.1.8 billion in spending cuts or previously unseen revenues, convince the government to allow a deficit increase or, as early signs suggest, force ZUS back to its already extended lenders.
"I am very curious about how consistently deputies behave and in what manner they will fulfill next year's budget," an irritated Minister of Labour Krzysztof Pater told reporters after watching the government lose its second vote of the day.
Pater quickly suggested that the burden would eventually go to ZUS and its lenders, but warned that ZUS credit lines were not infinite.
"The lending power of Polish banks [for ZUS] is running out," Pater said.
The Minister estimated the loss to the 2005 budget plan at around zł.1.8 billion after the consecutive votes.
"This is really the first negative news that we have had in days or even in weeks," said Citibank Handlowy's chief treasury analyst Katarzyna Zajdel-Kurowska.
Most notably, deputies rejected a government plan that would have raised select corporate contributions to social security premiums-a zł.1.2 billion hit to the 2005 budget. The other bill affected pension and disability payments.
ZUS is a big player on the lending market, with analyst estimates of total borrowing by the social security funds at some zł.5 to 6 billion already in 2004.
Poland's united opposition was boosted by four deputies from the ruling party who joined forces against the key bill, an element of the fiscal reform program known locally as the Hausner Plan.
Previous voting has already enacted what officials consider to be some 50 percent of the Hausner plan, according to statements made in mid-October. One key element of the plan concerning pensions in the farming sector remains in Parliament.
The vote was the first major snag for the government's 2005 budget plans, after what had been a relatively uneventful and undramatic parliamentary budget debate compared with previous years.
Under Polish constitutional rules, deputies are not allowed to alter the size of budget deficit proposed by the cabinet, although the cabinet is allowed to amend its budget bill, including the deficit level, at nearly any point during the process.
Deputies, however, have become increasingly skilled in recent years at finding revenues which the cabinet had not been able to plan, thus opening the door for pork-barrel spending.
Deputies deployed exactly this tactic recently on the Public Finance Committee when they were able to cut debt servicing costs by zł.1.3 billion and shift the funds to a one-off bonus for pensioners. (PAP, J.T.)
