Stable exchange rates needed to prevent escalation of public debt

Finance Minister, Andrzej Raczko, announced yesterday that domestic public debt would exceed 50% of GDP and only stable exchange rates in the immediate future would prevent it from topping 55%. "Devaluating the złoty will send us over 55% and that's why I did not agree to declare war on the National Bank of Poland (NBP)," Raczko added. The Public Finance Bill provides for special procedures if public debt exceeds 55% of GDP. If the debt is higher than 55% of GDP, in the new budget, it will have to decrease in relation to GDP. According to Raczko, this option blocks in-depth fiscal reform. The Minister has also turned to the NBP to finance a sizeable part of the public debt. (www.onet.pl; Rzeczpospolita, p. B1) J.K