Another slap on the wrist from the EU

European Union finance ministers told Poland last week to increase efforts to reduce its budget deficit and bring it within the bloc's recommended limits this year.

Approving a European Commission recommendation, ministers said Poland should lower its deficit by half a percentage point this year to bring it below or around three percent of GDP. They gave Poland until August 27 to demonstrate what steps, excluding one-off measures, it had taken to achieve the goal.

"Polish authorities should use these good economic times ... to adopt further measures of a structural nature required for a sustainable correction of the excessive deficit," EU Monetary Affairs Commissioner Joaquin Almunia said at a news conference. He added that Poland had not informed the EU of its detailed fiscal plans, and that he was concerned that the country might actually increase spending and reduce revenues further.

As Poland is not yet in the euro zone, the EU has no powers to fine it for the deficit. But it can freeze part of the money Poland receives as development aid.

Warsaw claimed that its current fiscal plans for the year ensure the deficit is closer to the limit. Deputy Finance Minister Katarzyna Zajdel-Kurowska explained that accelerating economic growth has made it unnecessary to make any additional effort. She added that last year's deficit was probably 3.5 percent of GDP and that it will likely fall further this year, possibly to less than 3.4 percent of GDP, "close to the reference level" of three percent. (Reuters)