8/08/2006

Poland: Finance Minister Kluza signals fiscal slippage

In an interview with the Polish business daily, Parkiet, Polish Finance Minister Kluza indicated that fiscal policy will be looser than the government – at least officially – had been planning. Kluza stated in the interview that the government budget deficit would not been brought down below 3% of GDP – the EU limit for budget deficits – in 2009 as planned, and that the deficit would more likely be 3½% of GDP in 2009. This in itself should not be that surprising to the markets but, on the other hand, it is yet another reminder that the Polish government is becoming less and less fiscally conservative.

Kluza also said that the Polish government would send its new convergence plan to the EU Commission in November. Given Kluza’s comments, the path for fiscal policy in the new convergence programme is likely to be less ambitious than in the previous plan – this is unlikely to go down well in Brussels.

Source:www.fxstreet.com



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