Optimistic forecast

The plan, which shows the budget deficit falling from 3.9 percent of GDP this year to 3.4 percent next year and 3.1 percent in 2008, relies heavily on expectations that Poland's economy will grow significantly faster than had been previously predicted.

The government's forecasts predict GDP growth at 5.4 percent this year, above five percent in 2007 and 2008, and up to 5.6 percent in 2009. The previous estimate had economic growth coming in at less than five percent this year and just barely reaching that level in 2008. European Commission forecasts also predict a slowdown in 2007-2008.

The EU expects Poland's budget deficit to come in at 4.2 percent of GDP this year, falling to 3.9 percent by 2008.

The government's forecast assumes monetary policy will be tightened in 2007-2008, and that the złoty would remain strong, keeping inflation from exceeding the central bank's target of 2.5 percent.

Central-bank president Leszek Balcerowicz said that GDP growth could reach as high as 5.5 percent this year, but was unlikely to meet the government's forecasts for the next few years without public-finance reform.

Regardless of the more optimistic forecast, the government remains wary. On Wednesday Prime Minister Jarosław Kaczyński said he was "skeptical" of the value of switching to the currency as soon as possible. "We have to accept the euro because of our obligations. But we don't have a date. We should do it when growth rates between Poland and the eurozone get closer," he said. (Reuters)