JP Morgan warns against choking economic growth with overtight budget

JP Morgan economist Ralph Sueppel says Polish fiscal policy is already fairly restrictive and warns against the further tightening being suggested by many economists. Prior to his leaving the government, ex-Finance Minister Leszek Balcerowicz proposed a considerable tightening of budget policy, which would reduce the budget deficit from 2.75% of expected GDP this year to just 1.5%. His successor Jaroslaw Bauc said he would like to keep the 2001 budget rather restrictive, although he is yet to give any details. Monetary Policy Council (RPP) member Boguslaw Grabowski and ING Barings economist Krzysztof Rybinski predict next year's budget could be the toughest in a decade and say Poland must tighten its fiscal policy in order to avoid a currency crisis. Sueppel does not agree: "Stabilization may be threatened not by exuberant fiscal demand, but by tightening overkill that could choke off economic growth and erode foreign investment." (Rzeczpospolita, page A1, Reuters) T.J.