Monetary Policy Council shaken but not stirred by 2001 budget assumptions

Poland's Monetary Policy Council (RPP) made no change to interest rates which stand between 17.5-21.5% at its monthly meeting on Wednesday, but called for the government to tighten fiscal policy in 2001 keeping in step with analysts expectations. In the statement issued by the 10-member board, the RPP empathized with the difficult circumstances Finance Minister Jaroslaw Bauc is in trying to balance the budget. However they stressed the proposed reduction of the deficit to 1.6% of gross domestic product (GDP) in 2001 from 2.0% this year was insufficient to prevent a significant and lasting reduction in the current account deficit. The RPP appealed to the government to try to further reduce the deficit. Any attempt to increase the deficit would significantly increase the risk of economic instability. Although the RPP believed the central government deficit is under control so far this year it was concerned about local government and state agency debt, especially cash shortages in the education and labor fund. (Rzeczpospolita, page B6, Reuters) P.S.