The crisis in public finance begins to spill over

Worsening appraisal of the 2004 budget, the threat that the budget will lose its liquidity, together with rumors of dismissing Prime Minister Leszek Miller, all combined to create a nervous atmosphere on the financial markets. This resulted in a depreciating złoty, as well as stocks and bonds, which were sold by both domestic and foreign investors. "The data shows that the budget has lost its so-called liquidity pillow, which in practice means that the Finance Ministry has little money at its disposal and will be desperate to sell its bonds at almost whatever price they can get," said Pekao economist Jacek Wiśniewski. The result of this unstable situation was the failure to sell an additional tranche of zł. 200 million five-year T-bonds, due to lack of investors interest. "The current speed in the drop of the bonds' prices is only observed in times of substantial destabilization. This is a consequence of the various rumors and concerns making the rounds," said Paweł Kielek from ABN Amro. (Rzeczpospolita, pp. A1, B1) M.M.