Economy in the fast lane

Deputy Prime Minister and Finance Minister Zyta Gilowska assured businesspeople during an annual conference of the British-Polish Chamber of Commerce that the economy is developing rapidly and that Poland already fulfills a number of eurozone entry requirements.

"Most likely, GDP growth in the first quarter of this year reached 5.2 percent. What is important is that this growth is accompanied by very low inflation," Gilowska stressed.

She went on to say that Poland, which is now the only new EU member state that hasn't determined a eurozone entry date, will be ready to adopt the new currency in 2009.

"We are still not ready with a very important criterion - that of government and local-government sector deficit. But we expect to meet that requirement in 2009, and that's when we will be able to start serious talks on euro adoption," she said.

According to Gilowska, the most important challenges Poland must now face are the reduction of the public sector deficit to three percent of GDP from the current 3.9 percent, reducing the cost of labor and implementing the reform of public finance.

The Finance Minister explained that the country's serious dilemma is the 'tax wedge', which is the difference between workers' take-home pay and the total cost of employing them.

"The difference is one of the biggest in Europe. The European Commission estimates that in Poland it amounts to 41.9 percent while the EU average is 36.4 percent. That's why we decided to do our best to decrease the tax wedge to the level of the EU average," Gilowska said.

She estimated the cost of needed reforms at 1.1 percent of GDP but according to her it will lead to an important jump in the number of jobs.