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Poland’s lawmakers allow for higher state deficit

July 26, 2013

WARSAW, Poland (AP) — Poland’s lawmakers on Friday allowed the government to amend its 2013 budget to make up for an increase in its deficit.

Prime Minister Donald Tusk revealed last week that, because of government revenues being lower than predicted in the first half of the year, the country’s deficit will be some 24 billion zlotys ($7 billion) higher than the 35.6 billion zlotys planned.

The higher deficit reflects how much Poland’s economy has slowed down, after managing to hold off the global financial crisis for several years. Economists say that Poland’s growth in its gross domestic product may be less than 1 percent this year, down from 1.9 percent in 2012, which had been the country’s lowest since 2001.

In a parliamentary vote, the government was given the go-ahead to loosen its fiscal discipline and increase its budget deficit ceiling by 16 billion zlotys, or about 1 percent of GDP, while making spending cuts of some 8 billion zlotys, or some 0.5 percent of GDP, to help bring the figure back on target.

Tusk said after the vote that the other option was to cut spending “to the bone” and cut individual people’s income.

Finance Minister Jacek Rostowski said the situation should be better in 2014.

“We will construct the 2014 budget in a cautious and conservative way, drawing conclusions from what happened this year,” he said.

The government is to draft the amendment in August.

Update hourly