Budget deficit hits 18-year low for first 9 months of '07

Finance Minister Zyta Gilowska announced yesterday that for the first time since the 1989 transition, the budget deficit has remained at zero for the nine months ending September 31 - a strong improvement on previous Government forecasts of an zł.18.55 billion deficit for the same period. The better-than expected fiscal position led Ministry officials to revise the forecast for the year further downwards to zł.21-22 billion from 23 billion (originally zł.30 billion). Why the good results? "We have strong economic growth accompanied by rising employment and wages. This translates into higher personal and corporate income tax receipts and into rising consumption, which drives indirect tax receipts," said Remigiusz Grudzień, an economist at PKO BP. For 2008, the ministry plans a deficit of zł. 28.6 billion, which Gilowska admitted was "still high." According to analysts, next year could also bring lower than expected deficit. But the real problem is that Poland's public finances are strongly dependent on economic growth. If it falters, there could be trouble. (Gazeta Wyborcza, p. 33) R.M.