Belka promises stable finances to encourage interest rate cuts from RPP

Finance Minister Marek Belka said yesterday he was committed to undertaking a fiscal overhaul that would enable the interest rate-setting Monetary Polic y Council (RPP) to deliver growth-boosting rate cuts. The new Cabinet, which was sworn in on Friday, has said it will freeze next year's spending in real terms and cap the 2002 budget deficit at around 5% of gross domestic product (GDP). "Recession is the biggest threat for the Polish economy right now, bu t we are committed to stabilizing public finances, thus creating room for lo wering interest rates," Belka told private Radio Zet. Flagging economic grow th has cut into state revenues, threatening to raise the budget deficit to u nsupportable levels next year. According to the latest Finance Ministry esti mates, this year's budget revenues could reach just zl.141.5 billion, some z l.11 billion short of the target set in the amended budget, and about zl.2 b illion less than was being anticipated only a few days ago. Belka said that the planned fiscal overhaul would create room for the RPP to lower Poland's interest rates. "It doesn't really matter whether the RPP will lower rates t his week or at its meeting next month. What is most important is a trend tha t needs to be set," he said. (Rzeczpospolita, p. B1; Reuters) P.J.