Economy Minister predicts that Cabinet will reject Bauc's budget plans

The cabinet is very likely to reject Finance Minister Jaroslaw Bauc's budget plan for next year, Economy Minister Janusz Steinhoff said yesterday. Steinhoff, who is also Deputy Prime Minister, said, "The chances of accepting this proposal are almost nil." In a speech made on Tuesday, Bauc warned that if spending cuts were not applied, next year's budget deficit might increase to as much as 11% of GDP. To avoid this, he proposed sharp cuts that would limit the gap to just 4.5%. His plan includes such elements as a two-year freeze on pensions, increased excise taxes, and a temporary import tax. However, any amendments to the budget, even if approved, can still be overturned by the next government, which is widely expected to be formed by the Democratic Left Alliance (SLD). Commenting on the proposed budget cuts, Hanna Gronkiewicz-Waltz, former governor of the National Bank of Poland and currently deputy chairman of the European Bank for Reconstruction and Development, said that budget spending cuts and income increases are necessary to limit the budget deficit. She added that she sees a possibility to cut interest rates, but in the event of a high budget deficit, they would have to be maintained at a high level. (Puls Biznesu, p. 20; Reuters) M.T.