Finance Min proposes cutting deficit and introducing VAT on farm products

Despite the instability in the coalition, cabinet has commenced debating the 2001 budget draft prepared by the Finance Ministry. The main proposals in the budget include more prudent public spending, cutting the current account deficit, and cutting taxes. The growth of the current account gap in the opinion of Finance Minister Leszek Balcerowicz, would be stopped by reducing the fiscal sector deficit from 2.7% of GDP to 1.5% next year. This will be possible if the social security institutions manage to collect 1.4-1.5% of GDP in pension premiums. This opinion however, is not shared by most economists who assert that the most probable reduction in the deficit is about 0.5% of GDP. Balcerowicz is also proposing the introduction of a value-added tax (VAT) on agricultural goods, otherwise the state coffers could lose up to zl. 30 billion next year. The Ministers have until Friday to appraise the budget draft and send it to Sejm, which has until the end of September to pass next year's budget. (Gazeta Wyborcza, page 22) S.M.