Public fears of financial crisis as złoty reaches historical high

On Monday the złoty lost zł. 0.07 against the Euro reaching a historical high of zł. 4.56 per EUR 1, as investors sold domestic currency over growing fears of a public finances crisis. The warning came from the Ministry of Finance that public debt might exceed 55% of GDP in 2004 scaring them even further. This means the 2006 budget would at least have to be balanced, which would in turn forecast cuts in salaries in the budget sector, pensions and expenditures on state functioning. Monetary Policy Council (RPP) member Bogusław Grabowski said, that the budget draft accepted by the government on Saturday was not only the worst in 10 years, but also scandalous. "This will not be a public finance crisis, as we already have one. This will be a state crisis," said Grabowski. Moreover the 52-week T-bond yields increased and exceeded 5%, which was the highest level recorded since May 2003. (Parkiet, p. 1) M.M.