OECD report disagrees with government predictions for 2003 GDP growth

According to an OECD report, 2003's GDP growth will amount to only 2.5% against the 3.1% predicted by the government. The main reason for the slowing pace of economic growth was the decrease in the level of investments caused by increased interest rates back in 2000. According to the OECD, it is essential to tighten fiscal policy in 2003. If not, the country might face many years of high budget deficits, high unemployment and increased public debt. This scenario might be more likely if Poland does not foster privatization and does not use the revenues to pay off its liabilities. The OECD also called for changes in monetary policy. Experts from the orga nization await further cuts in interest rates by 1.5 percentage points to relax an excessively tight monetary policy - further tightened by a strong currency. OECD analysts advise the Monetary Policy Council (RPP) to c o-operate more closely with the government in planning inflationary targets, which would then be more likely to be met. (Parkiet, p. 6) M.M.