Finance Ministry proposes plan for spending cuts and increased deficit

The Finance Ministry plans to combine spending cuts and a higher budget deficit in an effort to cover the shortfall in this year's budget revenue. The Ministry estimates that the shortfall will be zl.17.5 billion, a figure based on the assumption that GDP will grow by 2% this year, as opposed to the 4.5% envisaged in the budget. Under the Finance Ministry's new proposal, the planned deficit of zl.20.5 billion would be increased by between zl.6 billion and zl.8 billion. At the same time, savings of zl.7 billion to zl.10 billion would be generated through a 12% reduction in budget expenditure. The Finance Ministry considers a zl.8.6 billion increase in the deficit as reasonably safe. A bigger deficit would be difficult to finance with Treasury bill and bond issues, and could threaten economic stability. The Cabinet discussed the proposed budget amendments on Friday, and a final decision is likely to be made tomorrow (Gazeta Wyborcza, July 7-8, p. A1; Rzeczpospolita, July 7-8, p. A1) T.J.