Cabinet gives preliminary green light to 2005 budget draft

The government has granted its initial approved to the draft of the 2005 budget yesterday, foreseeing a decline in the general government deficit, as measured using domestic methodology, from 6.2% of GDP to 4.0% of GDP. The budget will now head to the Tripartite Commission and will be finally approved by the Cabinet on September 28. Central budget expenditure is to grow to zł.207.7 billion, i.e. at a rate slower than GDP, while revenues are to increase at a faster pace and reach zł.172.775 billion, leaving the deficit at zł.35 billion. The budget envisages an increase in spending on social assistance, justice, education and science, with tightening in several other categories. Despite the deficit reduction, public debt, as measured using the domestic definition, shall nevertheless increase from the expected 53.5% of GDP at the end of this year to around 56.6% of GDP at the end of 2005. The budget is based on previously announced assumptions of 5% real GDP growth and 3% inflation in 2005. (Puls Biznesu, p. 8) T.J.