Gov't U-turn on road construction pledges
The government is turning its back on pre-election pledges to prioritize infrastructure development by reducing transport investment forecasts for 2002, according to Bogusław Liberadzki, a Democratic Left Alliance (SLD) MP and chairman of the Sejm's transport subcommittee. It is a move that politicians and industry analysts said last week could spell suicide for the country's economic development.
"After we heard the prime minister's inauguration speech, we expected that infrastructure would be a priority, but when you look at the budget bill you see it won't," Liberadzki said.
The criticism comes amid a parliamentary debate over the budget bill for next year, which envisions a 12% reduction of spending on transport compared to a 1.3% increase of total budget expenditures in 2002.
The bill forecasts a reduction of spending on transport to zł. 4.19 billion ($1.02 billion) from zł 4.77 billion ($1.16 billion) in 2001.
Spending on national roads (the biggest portion of the transport budget) will be cut by 14% to zł. 1.76 billion ($430 million) from zł. 2.05 billion ($500 million), while investment in railway infrastructure is to be slashed by 60% to zł. 156 million ($38 million) from zł. 382 million ($93.1 million).
With the vote on the bill planned for this week, MPs from the transport committee warned they would push for a spending increase on transport infrastructure, which they said is the backbone of economic growth.
"The cuts will have negative consequences for the economy because they hit investment in transport ... and transport infrastructure is crucial for economic development," Liberadzki said.
He expected the (infrastructure) committee to propose an increase of budget spending on transport. "I will push for an upward revision of transport expenditures, particularly on investment in railway infrastructure," he added.
Tadeusz Jarmuziewicz, an MP from the biggest opposition party, Civic Platform (PO), said if the government wants to cut soaring unemployment, it should make a commitment to infrastructure investment, which is crucial to creating jobs. "It's the wrong (budget) position to make cuts," he said. "If there's no infrastructure, nobody will want to invest and create jobs."
But according to the Finance Ministry, cuts are inevitable in the current dire situation of the state budget. Even with cuts envisaged in many areas, the state budget deficit is planned to rise to zł. 40 billion ($10 billion) in 2002 from zł. 33 billion ($8.25 billion) in 2001 and 15.4 billion ($3.85 billion) last year.
The ministry plans to finance road construction and modernization with revenue from a tax on fuel, but it forecasts this will dip, forcing it to reduce spending on roads. "We predict the revenue from the fuel excise tax to fall from zł. 15.97 billion ($3.89 billion) in 2001 to zł. 14.7 billion ($3.5 billion) in 2002," said Mirosława Malesa of the Finance Ministry.
With the government now admitting that financing will be curtailed, industry analysts said only private capital will be capable of upgrading Poland's transport infrastructure.
"The only way now is to let private capital in," said Maciej Reluga, senior economist at ING Bank Śląski. He said as Poland is struggling to catch up with Western European economies, it needs to shift more funds from consumption into investment. "If we want to grow fast enough to catch up with the European Union (EU), we must spend some 30% of our GDP (gross domestic product) on investment," Reluga said. "Only then is 5-6% annual growth possible."
Currently, Poland funnels some 20% of its GDP into investment.
Krzysztof Rybiński, chief economist of BZ WBK bank, said local governments find it difficult even now to maintain roads with funds available, so the 2002 cuts will lead to a further worsening of road quality.
"Transport infrastructure will be among those sectors most hit by the budget cuts, but railroad tracks and asphalt don't picket at the entrance to the Sejm, so it's the easiest to make cuts here," Rybiński said.
Robert Wylot
