State budget for 2001 features 1.6% deficit with lower VAT and income tax

The Cabinet should accept the draft of the 2001 budget today or tomorrow, according to Finance Minister Jaroslaw Bauc. On Tuesday Bauc presented an outline of the budget fundamentals, including an economic deficit figure of 1.6% of GDP, calming analysts who were afraid the deficit would be higher. However, both VAT and income tax will be lower than previously expected next year due to lower economic growth. In order to maintain a tight budget, the government will have to cut spending. To achieve this, it will forward to the Sejm, together with the budget draft, several draft bills which are meant to save zl. 7 billion. The bills would cut spending on social security and social benefits. The budget is based on the assumption that economic growth will reach 5.1% next year, while inflation will drop from 10% this year to 7.2% in 2001, and the current account deficit will be reduced from 7% to 6.7%. (Gazeta Wyborcza, p.20)