S&P sees a harsh reality for the budget deficit over the next few years

Standard & Poor's rating agency has downgraded Poland's rating yesterday from A to A-. The agency criticized the government for its growing budget deficit and public debts. This announcement led to a sudden fall in the value of the złoty, and treasury bonds, which later made up for the loss. S&P estimates that the budget deficit will increase to 8.3% of GDP in 2004, up from the current 6.1%. Between 2005-2007 it will fluctuate around the level of 7%. "These forecasts are contradictory to those of the government, which envisage a budget deficit of 6.3% next year, which will gradually fall to 3.7% in 2006," said Beatriz Merino from the agency. S&P forecasts that Poland will be able to join the Euro zone after 2010, and that the public debt will increase significantly. It will exceed the level of 55% of GDP next year and 60% in 2006. The agency also recognized Minister Hausner's cost cutting program as rather modest. (Parkiet, p. 2; Rzeczpospolita, p. B1) A.K.