PiS policy becomes clearer
Over the past week, Poland's probable next Prime Minister Kazimierz Marcinkiewicz of Law and Justice (PiS) has been selling his plans for the Polish economy, which include, somewhat paradoxically, up to zł.14 billion in additional state spending while at the same time capping the budget deficit at zł.30 billion.
Marcinkiewicz envisions cutting taxes, eliminating red tape for those wanting to create new businesses, and increasing support for housing. PiS says it plans to build over three million apartments throughout Poland.
"This is a net of zł.12-14 billion, not everything will be possible to implement from January 1, 2006 and it will be possible to cover costs spread over two years," he told a news conference. Later, he said the tax breaks - a key element of PiS' election campaign - won't come into effect until 2007.
"We will not change the tax system from 2006 because [we want to secure] the stability of the tax system," he said. "We want changes to be passed in mid 2006 so that they can come into force from the start of 2007."
He has not yet mentioned any cuts to the 2006 budget, the current draft of which puts the deficit at zł.32.6 billion. That worries some experts, such as Dariusz Filar, a member of the interest-rate setting Monetary Policy Council (RPP). "If there is additional expenditure then how will it be financed?" asks Filar. "Lower taxes - this is good, but also we hear of billions of złoty of additional spending, simultaneously the budget draft is pretty tight and may not have much room for maneuver."
Poland's European Commissioner, Danuta Huebner, also expressed worry that the next government would not be able to find enough funds in the budget to co-finance EU development projects. "Reforms of public finances are of utmost importance to find funds for investment," Huebner said.
Projects financed from EU regional development funds must be co-financed by between 25 and 50 percent from a country's national budget. "There is so much funding to be received from the EU that it would be a mortal sin not to use it," said Huebner.
In response, Marcinkiewicz announced that he intended to allow independent economists to evaluate the budget. "I want the budget of my government to be evaluated by independent economic institutions which would create an annual report on the state of public finances," he told a news conference. "Every day the budget would be observed not only by the Finance Ministry but also by [state auditors]," he said, but did not announce what measures his government would take to cut expenditures. (Reuters)
