Experts warn deficit could reach 2.7%, with cost-cutting the only solution

Economists, including some members of the Monetary Policy Council (RPP), are warning that the economic deficit may reach some 2.7% of GDP instead of the 1.8% anticipated by the budget. This may occur as the result of a struggle to keep the budget deficit at the level of zl.20.5 billion. With decreased revenues almost certain, given the lower GDP increase, lower inflation rate and reduced domestic demand, the government may feel forced to delay paying debts to Social Insurance Company (ZUS). The only way to avoid increasing the economic deficit, and therefore the public debt, would be significant cost-cutting. The Finance Ministry admits that it has not yet presented any concrete proposals for cuts. It is not an easy task, indeed, as over three-quarters of budget expenses are guaranteed by law and cannot be reduced. (Prawo i Gospodarka, pp.1,2) M.K.