Finance minister speaks out on budget deficit and health care premiums

Finance minister Jaroslaw Bauc has said that the problems with the state budget mean there will be no possibility of lowering this year' s deficit below the government' s planned level of 1.8% of GDP. Speaking in an interview with the PAP news agency, Bauc said the main reasons for the high deficit are the strength of the zloty and the slower than expected growth of GDP. He explained that such factors reduce revenues for the state budget from import duty, VAT, and excise taxes. The minister said he was certain that it would not be long before the budget deficit was realized in full, and from then on state budget expenditure would have to be balanced by current revenues. He said he was against the proposal to raise premiums for health insurance to 9%, because according to his estimate such a move would increase annual budget expenses by zl.6 billion or zl.7 billion. The finance minister said that despite the state budget difficulties, no renewal of the budget is planned. He was optimistic about this year' s revenues from privatization, expected to reach zl.18 billion. And he was critical of the policies of the Monetary Policy Council (RPP), saying they led to the permanent strengthening of the zloty, and this created expectations for the further reduction in interest rates. (Gazeta Wyborcza, p. 22, Reuters) A.D.