Budget deficit passes 99% of annual plan, inflation increases to 6.9%

The budget deficit in the first five months reached zl.20.39 billion, or 99.3% of the total planned for the whole year. Despite the fact that May witnessed the first sign of the finance ministry's cost-cutting plan having any effect, with spending experiencing a significant fall, analysts are still insisting that the situation can only be brought under control by means of extraordinary bond and treasury bill issues. Meanwhile, the Central Statistical Office (GUS) announced yesterday that the inflation rate in May was 6.9%, or 0.3 of a percentage point higher than in April. "The news decreases the chance of an interest rate cut this month almost to zero," commented Dwyfor Evans from the Bank of America, when asked about the likely outcome of the next Monetary Policy Council (RPP) meeting, scheduled for June 26 and 27. Other analysts, however, were less certain, and suggested that the RPP's decision will depend on whether the government opts to cut spending, or instead to allow the budget deficit to increase further. (Gazeta Wyborcza, pp. 1, 20, Prawo i Gospodarka, pp. 1, 2) M.K.