Controversial budget draft sets next year's deficit at 1.6% to please investors

Yesterday, Finance Minister Jaroslaw Bauc proposed to reduce next year's budget deficit to 1.6 % of GDP, down from the expected 2.0 % this year. He failed to quash rumors of a possible loosening of the stringent fiscal policies proposed by his predecessor Leszek Balcerowicz. "This draft budget gives the impression of rigging macroeconomic indicators," said Ryszard Petru, an adviser to the former Finance Minister. He believes that the deficit proposed by Bauc is 1.3% higher than planned by Balcerowicz, which amounts to a difference of around zl. 10 billion, and is a pre-election "pork barrel." Analysts at ING Barings have criticized Bauc's proposals saying they do not allow for any lowering of interest rates in 2001. The draft budget also predicts a GDP growth-rate of 5.7%, annual inflation down to 6.1%, a current-account deficit not exceeding 7.1% of GDP, and the dollar staying around the zl 4.42 mark. (Parkiet, page: 1,7; Gazeta Wyborcza, page: 1; Reuters) P.S.