Government set to lower deficit

The Polish government on Tuesday approved  a draft of the 2009 budget, which slashes the deficit by almost half, preparing the economy for a slowdown.

The draft cuts the nominal deficit from this year's planned zł.27.1 billion to zł.18.2 billion. It also forecasts next year's annual average inflation at 2.9 percent and economic growth at 4.8 percent, from this year's 5.5 percent.

Prime Minister Donald Tusk will meet with members of the central bank's Monetary Policy Council (RPP) next Tuesday to discuss the budget. The initiative came as a way to discuss ways of fighting inflation, which has accelerated and peaked at around five percent last month.

"We will be discussing next year's budget, but also the situation in the global economy,"RPP member Dariusz Filar told Reuters.

Analysts have voiced concerns that a growth target of 4.8 percent is too optimistic, an opinion shared by RPP member Halina Wasilewska-Trenkner, who calls thedraft budget ambitious.

"It [the budget] will be very difficult to execute, but it is still possible," she told TVP Info in an interview.

Zbigniew Hockuba, a central bank management board member and adviser to the bank's governor said that Poland's economic growth may slow to four percent in 2009, much below the projected target. He added that the weaker growth would help curb inflation.

The government is expected to approve the budget draft at its regular sitting on Tuesday.

Sources: Reuters, TVN24