Goldman Sachs exposes the "election" side to VAT and budget cuts

The declarations made by Economy Minister Jerzy Hausner concerning the planned reduction in the VAT rate and his program of deep budget cuts constitute a wider part of an election campaign before the early parliamentary election in 2004, states a report prepared by investment bank Goldman Sachs (GS). The analysts consider the plan as "a great disappointment" and underlined that the government has not proposed anything concrete for 2004. "Miller said the cuts will come now or never - but what he appears to mean is that the most relevant changes will go through in 2005," say the GS specialists. They also point out that economic growth forecasts of 5% in 2004 and 2005 and 5.6% in 2006 and 2007 are highly optimistic. In their opinion the proposed reduction of the VAT rate, which accounts for a major source of budget income, is not feasible and can only be understood in view of the early parliamentary election. Such a presumption is further supported by the fact that the Prime Minister himself considered this combination, as he declared in April that the general election could be held together with the election to the European Parliament, on June 13, 2004. (Parkiet, p. 7) M.K.