IMF sees higher growth for Poland, still wants it to cut budget deficit

We have raised our projections for GDP growth in Poland in 2006 and 2007 to 4.8 pct and 4.5 pct" from earlier projections of 4.2 pct and 3.8 pct, said Susan Schadler, IMF mission chief in Poland

"The recovery so far is well balanced between consumption, investment and exports. Inflation and the current account deficit are low and the unemployment rate is falling. The fiscal accounts for 2006 are on track," Schadler told a news conference

Poland is faced with "major opportunities" to ensure strong growth in the medium term, including grants from the EU, which Poland joined in 2004, and "closer integration with other European countries." "But to turn these into higher growth, it will be necessary to raise private investment, increase employment and keep the growth of productivity high," Schadler said

To achieve strong, medium-term growth, the IMF urged Poland to "reduce the fiscal deficit to stabilise the public debt and to free savings for private investment

"In this regard the 30 bln zloty (7.5 bln eur) fiscal anchor is important," Schadler said, referring to the ceiling placed by the conservative government of Prime Minister Kazimierz Marcinkiewicz on the 2006 budget deficit. But she called for an even lower ceiling next year

"In our view, a deficit target for the state budget of 26 bln zlotys would be a solid step towards stabilising the public debt." The IMF also urged Poland to "prepare policies for euro adoption as soon as possible." "Early euro adoption would allow Poland to enjoy additional opportunities for expanding trade, increasing investment and also raising the standard of living of its inhabitants," Schadler said

Preparing for the euro would "take a few years," Schadler said, "but proceeding with those policy changes as rapidly as possible, so as to enter the euro area as soon as possible, would be beneficial to Poland" and spur growth.
Source:http://www.afxpress.com