The 2004 budget deficit target narrower than expected

Yesterday, the cabinet set the 2004 budget deficit target at a narrower than expected zł. 33.1 billion, but this has been based on the receipt of extra revenues from a contested release of central bank reserves. The Finance Minister, Grzegorz Kołodko, has assumed the release of zł. 9 billion, or one-third of the central bank's so-called revaluation reserve against foreign exchange shocks. As calculated by the Finance Ministry, the budget deficit would go down to 3.9% of GDP next year, from this year's 4.8%. Revenues were set at zł. 159 billion and spending at zł. 192 billion. Kołodko based his calculations on the assumption that economic growth would increase to 5% next year, from 3% this year. The average inflation rate is seen at 2.2%, up from 1% this year. Average interest rates are assumed to fall to 3.7% next year from the current 5.6%. (Reuters, Rzeczpospolita, p. B1; Gazeta Wyborcza, p. 18) J.K.