Finance Ministry draft budget sets deficit target for 2002 at zl.40 billion

The Finance Ministry delivered a new draft budget bill to the Cabinet yesterday, with the deficit for 2002, as was widely predicted, set at zl.40 billion. Under the Ministry's plan income will be some zl.154.8 billion, with budget revenues boosted by an increase in VAT. The base rate will go up from 22% to 24%, and the preferential rate from 7% to 8%. An interim 12% rate will also be introduced on some goods and services that will ultimately be charged at the base rate. Additional revenue will be generated from the cancelation of tax relief for married couples and tax-payers building their own homes. Meanwhile, budget expenditure will total zl.194.8 billion. To avoid exceeding this figure the Ministry proposes capping wage rises for workers who are paid out of the budget, as well as limiting increases in certain social benefits. In making its calculation, the Ministry has assumed that GDP growth will be around 2.5%, the inflation rate will be between 5.1% and 5.5%, and the unemployment rate will be around 18.8%. The government will discuss the proposal during a special meeting today. Under the st ipulations of the Constitution, the budget draft should be submitted to the Sejm before September 30. (Rzeczpospolita, p. B1; Gazeta Wyborcza, p. 20) M.K.