Coalition deal sets budget constraints but offers higher agriculture spending

An understanding was signed yesterday by the Democratic Left Alliance (SLD), the Polish Peasants Party (PSL) and the Labor Union (UP) on the formation of a coalition government. The agreement includes undertakings that the budget deficit will not exceed zl.40 billion and that budget expenditure will not increase above the rate of inflation. The members of the coalition also agreed that real growth in spending on agriculture will be achieved within two years, that the current VAT rates on foods, the means of agricultural production and construction materials will remain, and that State control over four key banks, PKO BP, BGZ, Bank Pocztowy and BGK, will be maintained. The coalition's priorities will include lowering unemployment and ensuring better access to education. SLD leader Leszek Miller is to name his Cabinet today. PSL leader Jaroslaw Kalinowski will become deputy Prime Minister, and the party is also expected to be handed control of two ministries, Agriculture and the Environment. The new government may take office as soon as October 19. (Gazeta Wyborcza, p. 12; Rzeczpospolita, p. A1; Reuters) M.T.K.